Consumer prices eased in April, marking the 10th consecutive month that the inflation rate has crept downward year over year, following a 9.1% peak in June 2022.

The consumer price index (CPI), which measures the price fluctuations of a broad basket of goods and services in the U.S., rose 0.4% in April after increasing 0.5% in March, the U.S. Bureau of Labor Statistics (BLS) reported Wednesday.

Over the last 12 months, U.S. inflation increased 4.9% before seasonal adjustment, the smallest 12-month increase since the period ending April 2021 and below economists’ expectations of 5.0% for the month.

“Today’s reports suggest that the Fed’s campaign to quell inflation is working, albeit more slowly than they would like,” said Quincy Krosby, chief global strategist at LPL Financial, CNBC reported.

The index for shelter was once again the most significant contributor to inflation, with the index for used cars and the index for gasoline following closely behind.

The 3% increase in the gasoline index more than made up for declines in other energy component indexes during the month, BLS stated in the report. The gasoline index was already expected to be impacted in April, given the decision by OPEC+ to cut oil production early last month, as highlighted by The Dallas Express in its previous CPI report.

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Core CPI, which excludes the volatile food and energy components, rose 0.4% in April on a month-over-month basis, which was in line with expectations and unchanged from the previous month, according to the report. On a year-over-year basis, core inflation rose 5.5%, down from 5.6% the month before but in line with expectations.

Earlier this month, the U.S. Central Bank issued its 10th interest rate increase, achieving its target range of 5% to 5.25%, set forth in the Fed’s Summary of Economic Projections in December 2022.

Although the report showed some positive signs that inflation was retreating back to the Fed’s 2% target goal, it is still too soon to expect the federal bank to begin dialing back interest rates.

The latest CPI data suggests “a risk that rates will need to remain high for a little longer than we have assumed,” said Andrew Hunter, an economist at Capital Economics, per The Wall Street Journal.

While headline inflation has seen a slow but steady decline over the last 10 months, core inflation has been unable to fall below 5.5% since breaking above it in January 2022. This event was a precursor to the Federal Reserve kicking off its most aggressive rate cycle in more than 40 years.

If core inflation had come in below 5.5% in April, it would have signaled that disinflation is finally occurring in the U.S. and that further rate hikes by the Fed would be unnecessary moving forward.

On the other hand, if core inflation had gone above 5.7% in April, it would have confirmed that inflation was rebounding higher and that more rate hikes would be needed before the Fed could pause rates.

Wednesday’s CPI data is not likely to force any drastic policy decisions from Fed Chair Jerome Powell, given the recent banking sector turmoil and the looming debt ceiling deadline on June 1.

Indexes that saw month-over-month increases in April include the energy index (0.4%), energy commodities (0.6%), gasoline – all types (2.7%), fuel oil (3%), commodities (0.6%), used cars and trucks (4.4%), apparel (0.3%), medical care commodities (0.5%), and shelter (0.4%).

Indexes that saw month-over-month declines in April include the food away-from-home index (-0.2%), energy services (-4.5%), electricity (-1.7%), utility – gas service (-4.9%), new vehicles (-0.2%), transportation services (-0.2%), and medical care services (-0.1%).

The next CPI report will be released on June 13, 2023, at 7:30 a.m. CST.