US Annual inflation fell to 2.3% in April, from 2.4% in March, and versus market expectations of 2.4%.
US MoM inflation was higher in April at 0.2%, from -0.1% in March, though below market expectations of 0.3%.
Annual core inflation (excl. energy and food) was unchanged at 2.8% in April, and in line with market expectations.
US MoM core inflation rose to 0.2% in April, up from the 0.1% in March, though below market expectations of 0.3%.
Nicholas Hyett, Investment Manager at Wealth Club said, “The introduction of sweeping new tariffs on imports into the US roiled markets in April. However, the short-term impact on inflation has proven less than the market had feared – with MoM inflation lower than consensus at both the headline and core level.
“That’s a relief for investors and borrowers – who have feared that tariffs could cause a spike in prices preventing the Federal Reserve from cutting interest rates to support the economy.
“The problem is that all the chopping and changing on tariffs means the picture is not at all clear. Importers sought to get ahead of the tariffs by stocking up in advance – leading to a serious distortion in GDP data. Extra stock has probably also allowed prices to stay lower for longer, as retailers and manufacturers wait to see where things land before hitting customers with higher prices.
“Today’s numbers suggest the US economy is a bit more resilient than some feared – but the tariff rollercoaster still has the potential to throw up future surprises. We suspect the Federal Reserve will continue to sit on the sideline and leave rates on pause for now.”
