Following the implementation of President Trump’s extensive tariffs, US inflation has shown an unexpected deceleration, particularly noted in the April reports.
According to the Bureau of Labor Statistics, the consumer price index (CPI) climbed by 2.3%, which is slightly below the 2.4% increase observed a year earlier in April.
Yet, there was a monthly uptick of 0.2% in prices during April, contrasting with a 0.1% decrease from March, as indicated by the latest data.
When excluding the more volatile food and energy sectors, the core CPI also rose by 2.8% compared to the previous year, marking a monthly increase of 0.2% from March.
UBS Chief Economist Jonathan Pingle noted in a memo that “we anticipate the initial indicators of tariff-related inflation will appear in April’s CPI, released on Tuesday.”
While year-over-year inflation has eased, the recent monthly increases may be the initial signs of impacts from Trump’s trade policies, a concern previously raised by the Fed.
Interestingly, the data from Tuesday might seem retrospective, especially as the US and China reached agreements on Monday to temporarily lower tariff rates, which helped alleviate tensions between these two major economies.
The new agreements will decrease US tariffs on Chinese goods from an alarming 145% to 30%. Meanwhile, taxes on US-China trade will drop from 125% over the next 90 days to just 10%.
