Cooling core inflation will bring US Fed some relief
US inflation probably moderated in April for the first time in six months, offering a ray of hope that price pressures will start to ease again after a string of upside surprises.
The core consumer price index (CPI), which excludes food and fuel, is seen rising 0.3% from a month earlier after 0.4% advances throughout the first quarter. The Bureau of Labor Statistics will issue its CPI report on Wednesday. Compared with April 2023, the core CPI is projected to rise 3.6%. While that annual increase would be the smallest in three years, it's still running too fast to placate Federal Reserve policymakers, who want evidence inflation is slowing consistently as they debate interest-rate cuts.
The overall CPI probably rose 0.4% for a third straight month as gasoline prices reached a six-month high. While core goods prices have largely been retreating, underlying services costs remain elevated and explain why inflation proved stubborn in the first quarter.
Part of the difficulty the Fed has had in bringing inflation down toward its 2% goal rests with the resilient American consumer. Retail sales in February and March advanced solidly, although projections for April suggest households took a breather. Those figures are also due on Wednesday.
On Tuesday, economists will parse the government's report on producer prices to assess the impact of categories such as healthcare that feed into the Fed's preferred inflation gauge — the personal consumption expenditures
