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Is inflation still cooling? Thursday’s report on June prices will provide clues

Workers serve customers at a fast food restaurant Thursday, June 27, 2024, in southeast Denver. On Thursday, July 11, 2024, the Labor Department issues its report on inflation at the consumer level in June. (AP Photo/David Zalubowski)

Motorists fill up the tank of a car at a gasoline station on Tuesday, June 25, 2024, in Loveland, Colo. On Thursday, July 11, 2024, the Labor Department issues its report on inflation at the consumer level in June. (AP Photo/David Zalubowski)

A sale sign is displayed on a rack of clothes at a store in Chicago, Monday, June 10, 2024. On Thursday, July 11, 2024, the Labor Department issues its report on inflation at the consumer level in June. (AP Photo/Nam Y. Huh)

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WASHINGTON (AP) — Optimism is rising among economists, investors and Federal Reserve officials that U.S. inflation is nearly under control , with the latest report on consumer prices expected to show another month of mild increases.

Consumer prices in the United States are believed to have edged up just 0.1% from May to June in data the government will release Thursday morning, according to a survey of economists by the data provider FactSet.

Inflation in June was likely held down by lower gas prices and a slight rise in grocery costs. The small increase would follow an unchanged reading the previous month. Measured from a year earlier, inflation for June is predicted to be 3.1%, down from 3.3% in May.

Chair Jerome Powell and his fellow Fed policymakers nevertheless still sound cautious . On Wednesday, Powell reiterated that there’s been “considerable progress” in slowing inflation to the central bank’s 2% target. At the same time, he cautioned that “more good data” would be needed for Fed officials to gain the confidence they need to cut their key interest rate, now at a two-decade high of 5.3%.

And even as overall inflation moderates, such necessities as groceries, rent and health care are much pricier than they were three years ago — a continuing source of public discontent and a potential threat to President Joe Biden’s re-election bid. Most other measures suggest that the economy is healthy, though slowing : Unemployment is still relatively low , hiring remains steady and many consumers continue to travel, eat out and spend on entertainment. Yet polls have shown that the cumulative price increases are weighing on Biden’s popularity.

The Fed has kept its key rate unchanged for nearly a year after having aggressively raised it in 2022 and 2023 to fight the worst streak of inflation in four decades. Its rate hikes have led to costlier mortgages, auto loans, credit cards and other forms of consumer and business borrowing. Inflation is now far below its peak of 9.1% in mid-2022.

If the June inflation data matches the collective forecast of economists, it would almost certainly qualify as another installment of the “more good data” Powell is seeking. Excluding volatile food and energy costs, so-called core prices are thought to have risen just 0.2% from May to June — the same as in the previous month — and 3.4% compared with a year earlier. That would be down sharply from June 2023, when core inflation had risen 4.8% from the previous 12 months.

Fed officials and economists pay particular attention to core prices, which are believed to provide a better gauge of where inflation is likely headed. Increases in core prices of roughly 0.2% a month or less are generally consistent with the Fed’s inflation target.

In the second half of 2023, core inflation cooled steadily, raising expectations that the Fed would cut its key rate up to six times this year. But then fast-rising costs for auto insurance, apartment rents and other services kept inflation elevated in the first three months of this year, leading Fed officials to downgrade their forecasts for rate cuts in 2024 from three to just one. Wall Street traders expect two rate cuts this year and have put the likelihood of a first cut in September at roughly 75%, according to futures prices tracked by CME FedWatch .

Some of consumers’ biggest financial headaches — the cost of food and gas — likely moderated last month and helped keep inflation in check. Gas prices dropped about 18 cents a gallon, on average nationwide, to $3.42 in mid-June, according to the Energy Information Administration. (It has since climbed about 6 cents.)

Grocery prices are thought to have ticked up 0.2% last month and just 1% from a year earlier. Still, they have jumped more than 20% in the past three years, pressuring many Americans’ budgets.

In testimony Tuesday to Congress , Powell noted that the job market has “cooled considerably” and is “not a source of broad inflationary pressures.” That marked a notable shift from his past comments, which had suggested that rapid wage growth could perpetuate inflation because some companies would likely raise their prices to offset their higher labor costs.

Instead, last week’s June jobs report showed that even as hiring remained healthy, the unemployment rate rose for a third straight month to a still-low 4.1%. More Americans have started looking for work, but some have encountered trouble finding jobs. Most of the economy’s hiring in recent months has come from just three sectors: Government, health care and a category that includes restaurants, hotels and entertainment companies.

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NY Fed finds moderating near-term inflation expectations in June

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Reporting by Michael S. Derby; Editing by Andrea Ricci

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Here's what the latest inflation report means for your money

By Aimee Picchi

Edited By Irina Ivanova

July 12, 2023 / 2:20 PM EDT / MoneyWatch

Inflation is rapidly cooling from its hottest pace in 40 years, providing some relief to Americans whose wallets have been strained by price increases in everything from groceries to housing. 

The Consumer Price Index grew at an annual rate of 3%  in June — the smallest increase since March 2021, the Labor Department  said  on Wednesday. 

While that's good news for consumers as they grapple with their daily expenses, the latest inflation figures are more than a reflection of the price pressures facing U.S. households. The data also influences key financial decisions by policymakers that may impact millions of consumers' budgets later this year, ranging from home buyers to senior citizens.

The Federal Reserve looks at the CPI data when deciding whether to increase interest rates ; it also considers a different inflation metric known as the Personal Consumption Expenditures Price Index , which tends to run lower than CPI. Although both indexes show inflation is cooling, it still remains higher than the Fed's target rate of 2% — especially so-called "core" inflation, which strips out volatile fuel and food prices. Core inflation rose 4.8% last month, more than double the Fed's target.

June's inflation "is really only a small step in the right direction," noted Brian Coulton, chief economist at Fitch Ratings, in an email. "Core inflation remains just under 5% on both a year-on-year and three-month annualized basis, which is far too high."

Here's what the latest data means for your money. 

How does inflation work?

Inflation is the increase in prices of goods and services, with the Consumer Price Index measuring a basket of items that are typically purchased by U.S. households, ranging from groceries to cars. 

In the past two years, inflation suddenly jumped higher, reaching a 40-year high in 2022. But the reasons for the inflationary spike are debated among economists, with some blaming corporate price gouging and others pointing to more classic supply-and-demand issues. 

Many economists have pointed to strong pandemic demand sparked by stimulus checks, coming at a time when supply was constrained by supply-chain breakdowns, as the cause for the run-up in inflation.

What does the June CPI mean for interest rates?

Sure, inflation is coming down, but it may not be falling fast enough to satisfy the Federal Reserve. 

Some economists are forecasting that the central bank will boost interest rates by one-quarter of a percentage point at its meeting later this month, scheduled for July 25-26. If the Fed raises rates again in July, consumers could face even higher borrowing costs.

Credit card APRs — already at a historic high — and mortgage rates could continue to rise if the Fed boosts rates in July because such debt tends to move in tandem with the underlying Federal Funds Rate. 

Even so, June's cooling inflation suggests that the Fed could ease up on interest rate hikes after July, some economists said.

"It is enough on a standalone basis for the market to put in question the Fed's dot projections of two additional hikes left this year," noted Alexandra Wilson-Elizondo, deputy CIO of multi asset solutions at Goldman Sachs Asset Management, in an email.

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Does this impact Social Security benefits? 

Yes, because Social Security benefits are adjusted annually for inflation — and the Social Security Administration bases its cost-of-living adjustment (COLA) on inflation data from July, August and September. 

While CPI data for those three months isn't available yet, some forecasters are projecting their estimates for the 2024 COLA based on inflation trends so far this year. With prices cooling, some are projecting that the nation's seniors will see a much smaller boost next year.

The COLA could be 3% next year, based on the June data, according to the Senior Citizens League, an advocacy group for older Americans. Another group, the think-tank Committee for a Responsible Federal Budget, said on Wednesday it estimates Social Security beneficiaries will receive a COLA of 2.6% to 3.3%, depending on where inflation falls in the next three months.

Are any items still seeing big price increases?

A few products and services are still seeing relatively high price increases, according to the June data. Housing, which includes rent and what homeowners pay for their properties, jumped 7.8% last month. Car insurance surged almost 17%, while restaurant prices jumped 7.7%, the Labor Department said on Wednesday. 

Housing inflation remains a major concern for consumers, and was the largest contributor to June's rise in prices. 

But economists expect that housing prices will begin to dip later in the year, helped by new construction. "Rents have been coming down in places where new rental construction has been coming online," noted Bright MLS chief economist Lisa Sturtevant. "More supply, even with steady or rising demand, lowers costs."

Where are Americans getting price breaks?

Prices are falling in several major spending categories, with energy costs representing the biggest drop. Gasoline is about 27% cheaper than a year earlier, labor data shows. Used car prices are also lower, with a 5.2% dip last month, while airline fares plunged almost 19%. 

On the grocery front, some items are paring their pandemic price gains, with eggs dropping almost 8%. That follows a surge in egg prices earlier this year that stunned some consumers and prompted some people to raise their own backyard chickens . Other grocery items with price cuts include pork, bacon and butter. 

The slowdown in inflation "will buy investors time and give them the opportunity to catch their breath," noted Wilson-Elizondo of Goldman Sachs.

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Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

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Here's where inflation stands today — and why it's raising hope about the economy

Scott Horsley

The latest inflation report is reinforcing hopes about a soft landing in the economy — or when inflation eases without sparking a downturn. Brandon Bell/Getty Images hide caption

The latest inflation report is reinforcing hopes about a soft landing in the economy — or when inflation eases without sparking a downturn.

Inflation got a little higher last month — but not enough to set off alarms.

Consumer prices in July were up 3.2% from a year ago, according to data released Thursday, driven in part by rising rent, gas and grocery prices. The increase came after the annual inflation rate had fallen steadily for the previous 12 months.

Could the U.S. still see a recession? We got big clues this week on where it's headed

Despite the rise in the headline rate, details in the report show inflation continuing to moderate. Stocks rallied on the news, which bolstered hopes for a "soft landing," in which the Federal Reserve brings inflation under control without tipping the economy into recession.

Here are four things to know about the latest report on inflation.

What was so encouraging about the latest inflation report?

Although consumer prices rose more in July on an annual basis than they did in June, that shouldn't be read as inflation gaining steam. Rather, it's the result of a single month of flat prices a year ago dropping out of the calculation.

Focusing on more recent months shows price hikes continuing to moderate. In fact, over the last three months, prices have climbed at an annual rate of just under 2%. And some prices are actually coming down.

So what is up — and what is down in price?

Goods overall are getting cheaper, with some exceptions like gasoline and groceries.

Used car prices were down last month, and they are expected to keep falling. Air fares dropped more than 8% in July for the second month in a row.

Rent is still going up, but not as fast as it had been. The economy is also seeing a moderation in the price of services – things like getting your car fixed or going to the dentist.

Service prices are largely driven by wages, so they tend to be stickier than other prices. The big question is whether service inflation will come down enough to bring overall inflation under control.

Why is Wall Street so encouraged about inflation?

The inflation data was within what Wall Street had forecast, and it reinforces hope that inflation is easing.

At the same time, other recent data is showing a sturdier economy than many had expected. The labor market, in particular, is holding up well despite the Fed's aggressive increases in interest rates since last year.

The Dow Jones Industrial Average jumped more than 400 points in the first hour of trading Thursday, although most of those gains were later reversed. The Dow closed up 52 points, or 0.15%.

Stephen Juneau, a senior economist at Bank of America, says he's encouraged about the trajectory of inflation.

"I think the direction of travel right now is really moving in the right direction, and is encouraging on the inflation front," Juneau said.

How could the inflation data impact the Fed's thinking?

Even before Thursday's inflation news, markets were betting the Fed would leave interest rates unchanged at its next meeting after raising rates aggressively since last year.

Oddsmakers see that as even more likely after this report.

But nothing's certain and additional economic data will determine the Fed's next action. The Fed doesn't meet until late September and there are still areas of concern, including higher oil prices which are driving up prices at the gas pump.

How could inflation impact households?

Although inflation is easing, it's still pretty high. Even if the Fed doesn't raise rates higher, they're likely to remain elevated for an extended period.

That has an impact on many people's pocketbooks since households are paying more for mortgages and credit cards, for example.

And the economy may be looking sturdier, but there's still a risk the U.S. could enter a recession.

China's economy, for example, is showing signs of slowing down significantly, which could impact the global economy at a time when the U.S. is taking a tougher stance against the Asian country.

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United States Inflation Rate

The annual inflation rate in the us is expected to fall for a third month to 3.1% in june 2024, the lowest since january, compared to 3.3% in may. the decrease would indicate the disinflation process is under way, following a brief uptick in the first quarter. compared to the previous month, the cpi is projected to increase 0.1%, after a flat reading in may. gasoline and used car prices likely fell and shelter costs moderated while food prices probably ticked up. meanwhile, core inflation is projected to remain steady at 3.4%, matching the rate from may and maintaining the lows seen in 2021. the monthly core inflation rate is anticipated to stay at 0.2%. source: u.s. bureau of labor statistics, inflation rate in the united states decreased to 3.30 percent in may from 3.40 percent in april of 2024. inflation rate in the united states averaged 3.30 percent from 1914 until 2024, reaching an all time high of 23.70 percent in june of 1920 and a record low of -15.80 percent in june of 1921. this page provides - united states inflation rate - actual values, historical data, forecast, chart, statistics, economic calendar and news. united states inflation rate - data, historical chart, forecasts and calendar of releases - was last updated on july of 2024., inflation rate in the united states decreased to 3.30 percent in may from 3.40 percent in april of 2024. inflation rate in the united states is expected to be 3.10 percent by the end of this quarter, according to trading economics global macro models and analysts expectations. in the long-term, the united states inflation rate is projected to trend around 2.40 percent in 2025, according to our econometric models..

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Employers added 206,000 jobs in June as sturdy labor market gradually cools

The summary.

• The Labor Department's June jobs report showed employers added 206,000 roles last month, down from 218,000 in May.
• Unemployment ticked up to 4.1%, inching above 4% for the first time since November 2021 while remaining historically low.
• The labor market has defied long-running forecasts of a sharper pullback in hiring, though conditions are steadily tightening.

The economy added 206,000 jobs last month, according to fresh government data, but unemployment inched above 4% for the first time in over two years.

The June jobs report , released Friday morning by the Bureau of Labor Statistics, showed somewhat hotter hiring than the 200,000 nonfarm job gains economists had expected. That marked a slowdown since May, whose level was revised down to 218,000 from 272,000 . April's job gains were also revised sharply lower, showing 111,000 fewer roles added during those previous two months than earlier thought.

"The June rise in nonfarm payroll was slightly higher than expectations, but the big downward revisions to April and May are the story," Kathy Jones, chief fixed income strategist at Charles Schwab, posted Friday on X . "Job market is slowing down."

The U.S. labor market has for months defied long-running forecasts of a sharper pullback. Instead, prospects for workers have generally remained robust even as employers ease up on hiring. The latest report shows conditions are gradually tightening.

Workers' pay continues to rise , with average hourly earnings up 3.9% in June from the year before. That's still higher than before the pandemic — and still outpacing inflation , at 3.3% as of May — but it is the smallest annual increase since May 2021.

And for the first time since November 2021, the unemployment rate ticked above 4%, hitting 4.1% in June. That remains a historically low level, and the uptick coincides with a slight rise in the labor force participation rate. That measure of working-age people who are employed or actively job-hunting hit 62.6% in June, up from 62.5% in May.

Slowing job growth combined with slowing inflation reinforces widespread hopes that the Federal Reserve could begin cutting interest rates in September, which would bring some relief to credit card users and people with loans and mortgages.

"If the job market continues to cool and inflation allows, the central bank will shift some of its attention away from the stable prices part of its mandate to increasingly focus on the other issue which is maximum employment," Bankrate Senior Economic Analyst Mark Hamrick said in a statement Friday.

Last week, the Fed's preferred gauge of price growth, the Personal Consumption Expenditures price index, climbed 2.6% from a year ago in May. That was the lowest annual rate since March 2021.

In remarks this week , Fed Chair Jerome Powell said risks to its inflation and employment goals "have come back much closer to balance." In other words, the odds the Fed won't act aggressively enough to wrestle inflation back down to its 2% target are now closer to even with the odds that unemployment will increase as a result.

"The longer the Fed maintains its high interest rate strategy, the greater the risk that it throttles the economy back too far," Moody's Chief Economist Mark Zandi told NBC News ahead of Friday's jobs report. "We're starting to see higher claims and layoffs and job market pullbacks. That's an increasing concern."

On Wednesday, the Labor Department reported initial claims for unemployment benefits continued to rise, while ongoing unemployment claims hit their highest level since November 2021.

Firing rates remain low, ING global financial group Chief Economist James Knightley pointed out in a note to clients this week, but "if you do unfortunately lose your job it is becoming much harder to find a new position," he said.

Still, many analysts have been encouraged by the pace and direction of recent labor market trends.

"That 206K is what full employment looks like in an economy that is cooling back towards trend," RSM Chief Economist Joe Brusuelas wrote on X following the June report, adding that a potential September rate cut remains in focus.

Nela Richardson, chief economist of payroll processor ADP, told reporters this week: "Right now we're seeing a job market that is experiencing what I like to call a modulated cooldown. It's striking the right note at the right time."

ADP's own data on private-sector hiring showed Wednesday that just 150,000 roles were added in June , fewer than expected, driven largely by leisure and hospitality.

"This is a gradual cooldown that we all expected," Richardson reiterated Friday o n CNBC after the report, adding, "I'd like to see the hiring be more broad-based than it is now."

I am a Pulitzer Prize-winning journalist covering breaking business stories for NBCNews.com, with a focus on writing for everyday consumers and ensuring online coverage of major business events. Day-to-day, I am responsible for writing about inflation reports, recalls, corporate announcements and consumer-focused government announcements, including regulations and enforcements. I also write features and explainers on a wide array of topics — everything from Disney’s conflict with Florida Gov. Ron DeSantis to the recent settlement with the National Association of Realtors that will change how homebuyers pay brokers, to the business of the WNBA.

J.J. McCorvey is a business and economy reporter for NBC News.

Inflation Cooled Slightly, Offering Some Relief for Consumers and the Fed

Prices climbed 3.4 percent in April from a year earlier, a moderation after some hot inflation readings this year. Stocks rose as investors bet that the Federal Reserve could cut interest rates sooner.

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+3.6% excluding

food and energy

+3.4% in April

Ben Casselman

What to know about the inflation report.

A closely watched measure of inflation eased last month, an encouraging sign for the economy after three straight months of uncomfortably rapid price increases.

The Consumer Price Index climbed 3.4 percent in April, down from 3.5 percent in March, the Labor Department said Wednesday. The “core” index — which strips out volatile food and fuel prices in order to give a sense of the underlying trend — rose 3.6 percent last month, down from 3.8 percent a month earlier. It was the lowest annual increase in core inflation since early 2021.

The slowdown will likely come as welcome news to consumers, and as a relief to policymakers at the Federal Reserve, who have been concerned that they were losing ground in their fight against inflation. But economists cautioned that one month of encouraging data was far from enough to set those worries to rest.

“I would characterize it as a small step in the right direction,” said Stephen Stanley, chief U.S. economist at Santander.

Both overall and core prices rose 0.3 percent from the previous month, down from 0.4 percent in February and March.

Inflation fell rapidly last year, giving rise to hopes that the Fed was on the verge of succeeding in its effort to rein in price increases without causing a recession, and that the central bank could soon begin cutting interest rates. But progress has since stalled, and investors have all but given up hope of rate cuts before September.

The encouraging inflation report on Wednesday is unlikely to change those expectations. But it could be a step toward giving policymakers confidence that inflation is returning to normal, which they have said they need before they begin cutting rates, which are currently set at about 5.3 percent.

“I think there will be something of a sigh of relief from the Fed, but at the same time there’s still work to be done,” said Sarah House, senior economist at Wells Fargo. She noted that services prices, in particular, continued to rise quickly in April, albeit more slowly than they had in recent months.

The report is also likely to be met with relief at the White House after what has been a rough recent run of inflation data for President Biden. Grocery prices fell outright in April, and are up just 1.1 percent over the past year, encouraging signs of progress in what has been one of the most painful categories of inflation for families.

But the report also provided fodder for Republicans. Gasoline prices rose a seasonally adjusted 2.8 percent in April from March.

Still, while Wednesday’s report contained some mixed signals, it did at least stop the bleeding after several months of bad news.

Had the data come in hotter than anticipated yet again, it could have led policymakers to conclude that high rates needed more time to bring inflation to heel. Speaking at an event in Amsterdam on Tuesday , Jerome H. Powell, the Fed chair, reiterated that recent inflation readings had made him more cautious about cutting rates.

“We did not expect this to be a smooth road, but these were higher than I think anybody expected,” he said. “What that has told us is that we will need to be patient and let restrictive policy do its work.”

Any further delay would be bad news for investors, who have been eagerly anticipating lower rates, and for low- and moderate-income Americans, who are increasingly struggling to manage the burden of higher borrowing costs. Data from the Federal Reserve Bank of New York on Tuesday showed that a rising share of borrowers are falling behind on their credit card bills as rates on those debts have skyrocketed.

Wednesday’s report showed improvement in some of the categories that had driven the recent uptick in inflation. Health insurance costs, which jumped in March, rose more slowly in April. Car insurance rates, too, rose more slowly, although still at an uncomfortably rapid clip.

But prices in one key part of the economy remained stubborn: housing. For more than a year, forecasters have been predicting that the government’s measure of housing inflation would ease, citing private-sector data showing rent increases slowing.

Instead, housing costs in the Consumer Price Index have continued to rise more quickly than before the pandemic, a pattern that continued in April.

“The initial reaction from the market to this data is that this is a relief, and it’s good news, because we’re not re-accelerating,” said Blerina Uruci, chief U.S. economist at T. Rowe Price. “But when I look at the details, it seems to suggest a degree of stickiness in inflation,” in part because of housing.

Still, the latest data could restore some confidence that policymakers will be able to keep bringing down inflation without causing a recession. The Fed had seemed on track to do that last year, defying predictions that high interest rates would inevitably cause a large increase in unemployment.

But as the fight has dragged on, some economists have become more concerned that the Fed will prove unable to control inflation fully without slowing the economy so much that people lose their jobs. Job growth slowed more than expected in April, and the unemployment rate has gradually crept up.

“The labor market has held up so well,” Ms. House said. “But the longer we keep interest rates where they are, the more I get worried about the labor market side.”

Jeanna Smialek and Jim Tankersley contributed reporting.

J. Edward Moreno

Stocks are rising in early trading as investors celebrate the inflation data, which has boosted hopes of Fed rate cuts this year. The S&P 500 is up about 0.5 precent and the tech-heavy Nasdaq Composite is up about 0.3 percent. The Russell 2000 index, which measures smaller companies more exposed to changes in the economy, is up 1.3 percent.

S&P 500

Jim Tankersley

No boasting over the inflation numbers from President Biden today. “Fighting inflation and lowering costs is my top economic priority,” he said in a statement. “I know many families are struggling, and that even though we’ve made progress we have a lot more to do.”

Biden has been trying for months to find the right balance between claiming credit for economic gains and expressing solidarity with voters struggling with high prices . Here, he’s leaning into the “feel your pain” side of the equation .

Former President Donald J. Trump’s campaign is, not surprisingly, hitting Biden on today’s report. “Joe Biden’s poll numbers continue to sink as prices for the American people continue to rise,” Karoline Leavitt, the campaign press secretary, said in a statement.

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Lydia DePillis

Volatile energy costs — especially gasoline — led the increase in inflation in April, but it was partly counterbalanced by categories such as vehicles and some food items.

Monthly changes in April

Gasoline (all types)

Motor vehicle insurance

Cereals and bakery products

Hospital services

Medical care commodities

Rent of primary residence

Food away from home

All items excl. food, energy

Dairy, related products

Alcoholic beverages

Physicians’ services

Tobacco products

Motor vehicle repair

Electricity

Nonalcoholic beverages

New vehicles

Meats, poultry, fish, eggs

Fruits, vegetables

Airline fares

Used cars, trucks

Piped utility gas service

All items excluding food and energy

Dairy and related products

Tobacco and smoking products

Motor vehicle maintenance and repair

Nonalcoholic beverages and materials

Meats, poultry, fish and eggs

Fruits and vegetables

Used cars and trucks

Madeleine Ngo

Food price gains moderated in April.

Food inflation eased in April, providing some relief to grocery shoppers struggling to deal with higher costs.

Overall, food prices were flat compared with the prior month, a slowdown from March, when prices rose 0.1 percent. Grocery prices fell 0.2 percent in April after remaining flat for two straight months. The cost of dining out rose 0.3 percent for the second month.

Compared to a year earlier, food inflation climbed 2.2 percent in April, the same rate it rose in March . Still, that is a faster rate than prices were rising before the pandemic.

Prices for fruits and vegetables declined 0.8 percent over the month after increasing 0.1 percent in March. Meats, poultry and fish prices fell 0.1 percent, down from an increase of 0.6 percent the month before. Some products saw more rapid price gains. Costs for cereal and cereal products increased 2.2 percent over the month, and prices for ice cream and related products rose 3.3 percent in April.

Egg prices declined 7.3 percent over the month. That was a reversal from the two months prior, when they rose 4.6 percent in March and 5.8 percent in February. Economists have mostly attributed the recent rise in egg prices to bird flu outbreaks hitting commercial farms.

Although egg prices declined in April, David Ortega, a food economist at Michigan State University, said there was still a lot of uncertainty surrounding bird flu outbreaks, and he expected prices to rise in the coming months if outbreaks continue to worsen.

Overall food inflation has cooled over the past several months as transportation and raw material costs have moderated. Economists have said they expect overall food inflation to continue easing in the coming months.

Still, the high cost of food has posed a political problem for President Biden ahead of the election. Although food prices have been rising at a slower rate in recent months, economists have said consumers might not be taking much comfort with that fact because prices are still significantly higher than they were a few years ago.

Meanwhile, retail sales came in weaker than expected, in a potential sign that high prices are continuing to depress purchases. The flat number came after a strong February and March, however, so it may not add up to real evidence of a downturn.

Jeanna Smialek

Blerina Uruci, chief U.S. economist at T. Rowe Price, said that she thought that the Fed still hasn’t “seen a sufficient deceleration to feel confident,” and said that she is forecasting a rate cut in December — but predicating that on cool inflation readings over the summer.

“I don’t think there is any benefit right now to signaling too strongly in either direction for the Fed,” she said.

Joe Rennison

Renewed signs of cooler inflation have bolstered hopes of rate cuts this year. Investors have tilted their bets toward September for when the Fed will first cut interest rates, based on prices in interest rate futures markets, with another cut expected by the end of December.

“This is the first good C.P.I. report in four months and the market likes it,” said Gary Pzegeo, head of fixed income at CIBC Private Wealth US.

Paul Ashworth, chief North America economist for Capital Economics, said, “all things considered, this is consistent with the Fed cutting interest rates in September,” in a note he wrote to clients.

Of interest to parents of young children, the cost of daycare and preschool rose 0.4 percent over the month. It has been rising slightly faster in the pandemic era than it had been in the years before, though it is less volatile than other categories.

One reason why: According to a report out today from Child Care Aware of America, the supply of new daycares hasn’t kept up with demand as parents go back to work in person.

This report ends what has been a rough run of inflation data for President Biden. White House officials would love to see even more cooling in price growth, but they will welcome this reading as a start.

I would expect Biden and his team to highlight falling grocery prices — progress on an issue that consumers are paying an enormous amount of attention to.

Airfares appear to have resumed their downward slide, after having risen sharply in the second half of last year. They have declined 1.2 percent over the past two months.

Housing inflation held steady in April, as a more marked slowdown remains elusive.

Housing inflation remained unchanged in April, offering little comfort for Federal Reserve policymakers as they look for further evidence that inflation more broadly is slowing down in a sustainable way.

Economists have been closely watching housing inflation, which makes up about a third of Consumer Price Index inflation. They have expected it to cool meaningfully, but so far it has moderated only slowly.

Forecasters have been looking for a slowdown because market-based rents on new leases have cooled notably, and economists have expected that to slowly feed into official inflation data. But the government’s inflation figures capture more than just new rents: They try to represent what is happening to all rental units, including those with existing leases, and also estimate how much it would cost to rent owner-occupied housing.

It is taking an unexpectedly long time for the slowdown in real-time rents to move into those measures, though it is slowly happening. The Bureau of Labor Statistics’ rent of primary residence index picked up 0.4 percent in April from the previous month, in line with its March gain. And a measure that tracks how much it would cost someone who owns their house or apartment to rent it climbed by 0.4 percent, also unchanged.

That pace of increase is slower than last year, but it is also a reminder that it is taking time to turn the tide on housing inflation.

Economists broadly still expect official housing inflation measures to moderate this year. Rent growth on existing leases must eventually slow down to look more like the rent growth on new leases, the logic goes, because otherwise people who are facing big rent jumps will simply move.

But there is uncertainty around both when that moderation will happen and how extensive it will be. And some economists have been eyeing a recent tick up in at least one measure of new leases — a nervousness that is likely to linger in light of the new data.

One component pushing up the headline inflation index was energy, which has been bouncing around a lot since peaking in 2022. It rose 1.1 percent over the month and is up 2.6 percent since last year.

The two-year Treasury yield, which is sensitive to changes in interest rate expectations, fell sharply after the numbers were released, as investors appear to have dialed back how long they expect interest rates to stay elevated for.

The dollar is also sharply weaker, a welcome sign for many countries around the world.

Stocks are rallying, as investors welcome a return to the trend of cooling inflation data. Futures on the S&P 500, which allow investors to trade before the official start of trading, rose 0.5 percent in premarket trading, on course to push the index to a fresh record high.

Emily Flitter

This inflation report shows that car insurance prices are still rising, but at a slower rate than last month. The index for motor vehicle insurance rose 1.8 percent in April, after a 2.6 percent rise in March.

Even though it’s slowing, the rise in car insurance is still staggering compared with other inflation components. Car insurance prices haves risen by 22.6 percent over the last year. Insurers have just recently gotten permission to adjust their prices to conditions that have since faded, and now they’re hoping to start turning a profit again.

One of the biggest drags on inflation came from cars — prices for used vehicles were down 1.4 percent over the month, and the cost of new vehicles declined 0.4 percent.

The combined used and new vehicles index is now down about three percent from its peak in May of last year.

Food prices were flat in April compared with the previous month, a slowdown from March, when prices rose 0.1 percent. Grocery prices also fell 0.2 percent, providing some relief to consumers.

Egg prices fell 7.3 percent in April, a reversal after prices rose 4.6 percent the month before.

Jason Karaian

The numbers are in: U.S. consumer prices rose 3.4 percent in the year through April, a slight downtick in the inflation rate. That’s roughly in line with what economists expected.

We are all watching closely to see what happens with rent and a measure of rent that applies to homeowners this morning. Economists have been waiting for months (and months) for it to come down.

Stocks are mixed as investors await the inflation data. The S&P 500 is flat in premarket trading. The tech-heavy Nasdaq Composite is down slightly, after some lukewarm news from big tech companies like Apple and Amazon.

A positive report could be enough to push the S&P 500 back up to another record high, after a brief blip in this year’s rally.

The Fed chair’s confidence in cooling inflation is ‘not as high’ as before.

Jerome H. Powell, the Federal Reserve chair, reiterated Tuesday that policymakers were poised to hold interest rates steady at a high level as they waited for evidence that inflation is slowing further.

Fed officials entered 2024 expecting to make interest rate cuts, having lifted borrowing costs sharply to a more than two-decade high of 5.3 percent between 2022 and the middle of last year. But stubbornly rapid inflation in recent months has upended that plan.

Central bankers have been clear that rate cuts this year are still possible, but they have also signaled that they are planning to leave interest rates on hold for now as they wait to make sure that inflation is genuinely coming under control.

Speaking during a panel discussion in Amsterdam, Mr. Powell said officials had been surprised by recent inflation readings.

“We did not expect this to be a smooth road, but these were higher than I think anybody expected,” Mr. Powell said on Tuesday of recent inflation readings. “What that has told us is that we will need to be patient and let restrictive policy do its work.”

Mr. Powell said that he expected continued growth and a strong labor market in the months ahead, and that he believed inflation would begin to slow again.

But, he said, “my confidence in that is not as high as it was, having seen these readings in the first three months of the year.”