U.S. released a 2.3% adjusted CPI annual rate in April, the lowest since February 2021

The U.S. Bureau of Labor Statistics has announced that the adjusted CPI annual rate in April was 2.3%, the lowest since February 2021 and lower than market expectations at 2.4%. The unadjusted core CPI annual rate in April was 2.8% and remained at the lowest level since March 2021.

The Federal Reserve chair argued that tariffs could be inflationary, as U.S.-China tariff deals are ongoing at reduced rates while negotiations with other countries are also underway. Barclays and Goldman Sachs predicted the Fed would cut rates in July following a stronger-than-expected jobs report on Friday.

U.S. annual inflation rate falls to 2.3% in April

US inflation cooled slightly in April, suggesting that tariffs haven't yet made their way into consumer prices—or aren’t pushing inflation higher.
Headline CPI came in at 2.3%, down from 2.4% in March and the lowest since Feb2021. It also came in below expectations (consensus was… pic.twitter.com/dPXO7vtswa

— Holger Zschaepitz (@Schuldensuehner) May 13, 2025

The U.S. has announced that the CPI annual rate fell to 2.3% in April, the lowest since February 2021. The annual rate also dropped from 2.4% in March and was below predictions of 2.4%.

The U.S. also revealed that April’s annual core inflation rate stood at a four-year low of 2.8%, unchanged from March and in line with market expectations.

The U.S. Bureau of Labor Statistics reported today the Consumer Price Index increased 0.2% in April from March. The market expected a 0.3% increase following the 0.1% drop in March. The all-item index has increased 2.3% over the last 12 months. The Core Consumer Price Index, which excludes volatile food and energy prices, also increased by 0.2% in April from March, less than the 0.3% expected but more than the previous 0.1% increase.

U.S. tariffs impact the rate of inflation

Last week, the Federal Reserve held interest rates steady at 4.25%-4.5% in anticipation of more certainty around tariffs’ impacts. CME FedWatch, which shows traders’ sentiment toward interest rates, also indicated before and after the inflation report a 92% chance that rates would be unchanged at the FOMC’s next scheduled meeting in June.

The President announced the reciprocal tariffs on April 2 before quickly pausing some of them for 90 days. Trump imposed a 10% tariff, with an additional 145% tariff on most imports from China and 25% on autos, steel, and aluminum. 

The U.S. announced on Monday a trade deal with China that saw the countries agreeing to cut rates by 115% points for 90 days. Trump also revealed last week that the U.S. and the UK reached a deal. 

The President said that the 10% tariff is still in effect, but the two countries negotiated agreements on vehicles, steel, and aluminum from the UK. The White House press secretary Karoline Leavitt highlighted on Friday that Trump is committed to the 10% baseline tariff, not just for the UK, but for his trade negotiations with all other countries as well.

BeiChen Lin, senior investment strategist at Russell Investments, argued that businesses likely stocked up before Trump’s 10% tariffs, which could be delaying their impact on inflation figures. Lin added that there would be a temporary boost in the inflation rate if the broad 10% universal tariffs aren’t negotiated away.

The Federal Reserve Chair Jerome Powell also mentioned in a May 7 press conference that tariffs could affect overall economic growth and the job market.

“If the heightened tariffs are sustained, they are likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment.”

– Jerome Powell, Federal Reserve Chair.

The Fed chair also acknowledged that the economy is resilient, with a solid job market and inflation just above the Fed’s target of 2%. The U.S. GDP dropped in Q1 of 2025, the first time since 2022, but a large increase in imports that subtracts from growth contributed to that contraction. 

Powell also noted that the U.S. was in a good place since the Fed’s policy was 100 basis points less attractive than last fall.

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