WASHINGTON—U.S. inflation accelerated sharply in April, with higher energy, housing and food costs pushing the Consumer Price Index higher and complicating expectations for potential Federal Reserve rate cuts later this year.
The U.S. Bureau of Labor Statistics reported Tuesday that the Consumer Price Index for All Urban Consumers rose 0.6% on a seasonally adjusted basis in April, following a 0.9% increase in March. On an annual basis, consumer prices climbed 3.8% through April, up from a 3.3% annual rate in March.
Energy prices were a major driver of the monthly increase, rising 3.8% in April and accounting for more than 40% of the overall gain, according to the BLS. Shelter costs also increased 0.6% during the month, while food prices rose 0.5%, including a 0.7% increase in grocery prices. Core inflation, which excludes food and energy, rose 0.4% in April and was up 2.8% over the prior 12 months.
Several categories posted notable monthly increases, including household furnishings, airline fares, apparel, personal care and education, while prices for new vehicles, communication services and medical care declined. The report is likely to reinforce concerns among financial institutions and policymakers that inflation pressures remain persistent despite the Federal Reserve’s efforts to cool the economy.
"Inflation continued to rise in April, driven by higher gas prices. Overall prices are now 1.4 percentage points higher year over year since February, moving further away from the Federal Reserve's target," noted America's Credit Unions Senior Economist Dawit Kebede. "If this trend continues, price increases could spread to other goods and services, further exacerbating inflation risks, squeezing consumers, and straining affordability. Through these challenges, credit unions will remain a trusted partner to members."