The inflation of the United States cooled slightly in April in what economists warn that it could be a final pause before a probable increase in consumer prices that votes from President Trump’s commercial war.
The best -expected report is good news for the Trump administration and the Federal Reserve, which has been trying to fight against its 2 percent target from the pandemic. But policy formulators and economists do not expect the postponement to last, predicting that prices begin to accelerate in the coming months as import taxes begin to bite.
The consumer price index increased 2.3 percent compared to the previous year, the slowest annual rhythm since the beginning of 2021, the data published by the Office of Labor Statistics showed on Tuesday. In the course of the month, prices rose 0.2 percent, an acceleration compared to the 0.1 percent March decrease.
An underlying inflation measure, which eliminates volatile food and energy articles, rose 2.8 percent compared to the same time last year, in line with the increase year after the year of March. In a month base, prices rose 0.2 percent, exceeding slightly the previous months, an increase of 0.1 percent.
Egg prices fell almost 13 percent in April, which helped reduce food -related costs by 0.1 percent for the month. Gasoline prices also decreased, falling 0.1 percent. The prices of cars and used trucks fell 0.5 percent, while new vehicle prices were stable. Air rates fell 2.8 percent, extending a 5.3 percent drop in March.
However, furniture costs increased together with those of personal care services and motor vehicle insurance.
The data is found immediately after a significantly in the Trump administration on its tariffs with China. On Monday, officials in Washington and Beijing agreed to temporarily reduce what had punished Tit rates per other for 90 days.
The United States agreed to eliminate its tariffs to Chinese products to 30 percent from the minimum level of 145 percent that has bone since last month. China reduced its tariff on US assets to 10 percent of 125 percent.
While the pause reduced the probabilities of a much more severe economic shock, economists and policy formulators, including those of the Fed, have warned that the scope and scale of tariffs that Mr. Trump will probably maintain in place the possible inflation, while simulting the growth of the dentad.
There is still a 10 percent rate against almost all business partners in the United States and combined with reduced DUITs in China, economists estimate that consumers still face an effective tariff rate of around 15 percent.
The complete effects of these levies will take time to appear in the economic data, with most of the related price inception increases potentially, they do not materialize until summer.
There are many reasons for delay. In advance of import taxes, many companies ran to build inventories before tariffs are activated to avoid higher costs. Companies, some already have to increase prices for fear of moving consumers with cash liquidity, can first reduce these reserves without having to sell new products at higher prices. Tariffs on intermediate goods, which are used to produce other products, also pass to consumer items slowly.
What is not yet clear is whether tariffs will cause only a unique price increase or feed a more persistent inflation problem. The Fed is concerned about the last scenario and has made its priority for the moment to ensure that inflation expectations in a longer time horizon do not change significantly more.
The fear is that if consumers expect high prices and, ultimately, they demand higher salaries to compensate for these higher costs, that could implement a period or significant inflation Lemher that ultimately is more difficult for food.
The Central Bank has put in waiting for interest rate cuts for the moment until they obtain more clarity on the economic impact of Trump’s policies. The bar to reduce loan costs is high, suggestion officials will wait to see substantive signals that the labor market is in danger before taking action.
