Inflation Research Brief

Headline CPI inches up in April amid notable trade policy shifts. Changes to consumer prices in April indicate that tariff-related costs increases have yet to pass through to households. During the month, the consumer price index for all items rose 0.2 percent, bringing the annual inflation rate to 2.3 percent. Core CPI, meanwhile, remained unchanged at 2.8 percent year over year. Underlying price pressures were relatively stable during the month, and the recent 90-day agreement between the U.S. and China in May to reduce tariffs has interrupted the escalation of trade tensions. Even so, in-place duties are expected to place upward pressure on inflation in the coming months. Rising business input costs — reflected in recent Institute of Supply Management data — point to mounting cost burdens that could also reaccelerate consumer price growth in the months ahead.