Washington, DC – The April Headline Consumer Price Index (CPI) data was released today, showing a 0.3% increase, slightly below the expected 0.4%. On a Core basis, the 0.3% print was in line with economists’ expectations. Year-over-year, the Headline CPI is now at 3.4%, a tenth lower than the previous month, reflecting a cooling trend in consumer prices.

Furthermore, the report indicated that the Core CPI rate for the year was at 3.6%, marking the lowest rate since April of the previous year. This continued a trend of inflation remaining above 3% for the 37th consecutive month. In terms of Retail Sales for April, the headline figure remained unchanged compared to March, falling significantly below the expected increase of 0.7%.

The market responded positively to the data, with yields on the US 10-year Treasury note dropping to 4.35% and stocks rising as inflation and consumer spending showed signs of cooling. The likelihood of a rate cut in July is now more probable, with the Fed swaps market pricing in a faster pace of cuts for 2024.

Despite the positive data, concerns remain about underlying consumer price trends, particularly in Core Services inflation which held firm at +5.3% year-over-year. The US Supercore CPI rate also saw a decrease, verifying at 0.422%, the lowest of the year compared to the previous month.

Overall, the April CPI data provides some relief for both market bulls and doves, breaking a trend of hotter-than-expected reports in the previous months. With the Federal Open Market Committee (FOMC) meeting approaching, attention will now turn to the next PCE update and the May CPI release during the Fed’s policy meeting to gauge further expectations for rate cuts in the future.