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Fears that President Donald Trump’s dramatic new global tariff regime will supercharge inflation didn’t materialize in April.
That’s according to the Consumer Price Index (CPI) from the U.S. Bureau of Labor Statistics, which shows inflation rising 2.3% year over year and 0.2% more than March. The annual rise is the lowest since February 2021.
While the numbers reflect expectations for the index from economists, Trump’s on again, off again tariffs could still push inflation up in the coming months. The lack of clarity on trade policy will likely prompt a wait-and-see approach from the Federal Reserve with regard to interest rate cuts.
“Despite a modest improvement in inflation, economic uncertainty remains high,” said Realtor.com Senior Economist Jake Krimmel in a statement. “Uncertainty around how trade policy will impact future inflation, consumer sentiment and job growth has muddied the outlook for Fed rate cuts — and, in turn, mortgage rates. Until borrowing costs fall meaningfully, housing activity is likely to remain subdued, even as underlying demand and supply slowly improve.”
The CPI shows that shelter costs continue to accelerate. Over the last 12 months, housing rose by 4%, with a month-over-month rise of 0.3%. Rent rose 0.3% compared to last month, while the owner’s equivalent of rent jumped by 0.4%.
Anticipation for May’s CPI report will be high. Trump entered his second term as president threatening “reciprocal” tariffs, but what he unveiled on April 2 was anything but. Even the closest allies of the United States were hit with astronomical tariffs rates.
Trump has since dialed back the tariffs significantly. Hours after the levies took effect on April 9, he paused them for 90 days, though a 10% baseline tariff on all but a handful of countries remains.
Trump’s tit-for-tat with China also deescalated on Monday. The U.S. tariff on China hit 145%, but it’s been reduced to 30% for 90 days.
