Rising housing and energy costs are still having the biggest impact on inflation.
US Consumer Price Index (CPI) REPORT released by the Bureau of Labor Statistics (BLS) on Wednesday found that the inflation rate was 3.4% in April compared to prices a year ago, slightly below the 3.5% inflation rate recorded in March.
The CPI report measures how much the prices of food, clothing, housing, transportation and other goods and services change over time in 75 cities across the country. The CPI takes into account 6,000 residential units and 22,000 retailers.
The cooling is a step in the right direction towards potentially lower interest rates, for Bloomberg. Price increases were less than economists expected and arrived after three consecutive higher-than-expected CPI reports.
“This was a good report in the context of three warmer-than-expected (CPI) reports, and makes it look like they were potentially bumps in the road rather than a stagnant inflation environment,” said Tyler Schipper, a professor of economics at the University of St. Thomas in Minnesota. CNN Business.
Housing and gas contributed more than 70% of the price increase in April; these two categories combined contributed to more than half of the price increase in March.
The cost of food remained unchanged: The food category, which increased by 0.1% in March, kept the same prices in April.
Connected: CPI report: Inflation rose more than expected in March, driven by housing and energy costs
Gas and rent prices are rising
Gas prices rose 5.2% in April, before seasonal adjustment, pushing energy prices up 1.1% overall for the month.
Last year, gas prices increased by 1.2% and electricity by 5.1%. At the same time, in the same energy category, natural gas prices fell by 1.9% and fuel by 0.8%.
In the housing category, rent rose by 0.4% in April, as did owner-equivalent rent.
The report opens up the possibility of “a potential rate cut later in the year,” said Kathy Jones, Charles Schwab's chief fixed-income strategist. Bloomberg. “It will take several more readings showing that inflation is coming down for the Fed to act.”
The next CPI report will be released on June 12.