US Inflation Slows, Markets Cautious After CPI Report

U.S. inflation cooled for the third consecutive month in April, with the Consumer Price Index rising 2.3% year-over-year, the smallest gain in over four years and a slight decrease from March's 2.4%. Grocery prices dropped 0.4%, highlighted by a sharp 12.7% fall in egg prices, while energy prices were mixed with notable increases in natural gas. Recent tariffs imposed by President Trump on steel, aluminum, and Chinese goods have not yet significantly affected most consumer prices, although categories such as auto parts and furniture have seen increases. Core inflation, which excludes food and energy, remained steady at 2.8% annually. Financial markets responded cautiously, with Treasury yields steady and stock futures dipping as investors weighed the implications for future Federal Reserve rate cuts. Economists caution that the full impact of tariffs may emerge later, potentially reversing the recent cooling trend in inflation.