- Annual inflation on U.S. goods and services fell to 2.3% in April.
- The 12-month rate is the lowest since February 2021.
- Economists say tariff impacts were minimal last month but are on the way.
U.S. inflation came in at 2.3% in April, down slightly from March‘s reading and the lowest annual rate since early 2021, according to a Tuesday report from the U.S. Labor Department.
On a monthly basis, the Consumer Price Index moved up 0.2% in April driven in large part by a 0.3% uptick in housing related costs. Energy costs also moved up in April, 0.7%, with the impacts of declining gas prices offset by higher costs for both electricity and natural gas.
Grocery costs declined 0.4% in April but were still up by 2% over the same time last year. While egg prices dropped by nearly 13% from March to April, the cost of a dozen eggs is still nearly 50% more than 12 months ago.
Core inflation, which strips out volatile food and energy prices, came in at 2.8% in April, matching March‘s annual rate.
Tariff price impacts are yet to come
Economists note the April inflation data wasn’t yet reflecting the full impacts of new tariff rates, the most severe of which have been placed on 90-day pauses, but are predicting the prices of consumer goods are likely headed up in the near term.
“On its face, the numbers in the CPI report are good news for consumers: food prices being down, some air travel being slightly cheaper, things that people like to see in the economy,” said Tyler Schipper, associate professor of economics and data analysis at the University of St. Thomas in St. Paul, Minnesota, per a CNN report.
“Those tariffs are still out there, they’re still at levels that we have not seen in a very long time, and there are some good explanations for why we shouldn’t necessarily be seeing price increases yet.”
The group of Mountain West states, which include Utah, had the lowest regional inflation in the country last month with the cost of consumer goods and services rising a modest 1.2% on an annual basis.
New trade levies that went into effect in April include 25% tariffs on steel and aluminum as well as a 25% fee added to some imported goods from Canada and Mexico. Also, a 20% tariff on Chinese imports, aimed at quelling the flow of illicit drugs like fentanyl, according to President Donald Trump, took effect last month.
Much larger retaliatory tariffs announced on April 2 were put on pause a week later by the president and a 145% levy on Chinese goods will drop to 30% for 90 days beginning Wednesday. A blanket tariff of 10% on most goods exported to the U.S. remains in place.
Matt Priest, president and CEO of the Footwear Distributors and Retailers of America, told the Associated Press that the cost of shipping goods from China will likely rise as many companies scramble to get orders to the U.S. during the 90-day window.
“We’re not out of the inflationary cost woods yet,” he said.
And economists say average tariffs are now at about 18%, roughly six times higher than before Trump took office and the highest in about 90 years.