Fed Core Inflation Falls to Four-Year Low Amid Tariff Uncertainty

Inflation in the United States is showing signs of cooling, with the personal consumption expenditures (PCE) price index falling to a 2.1-percent annual increase in April, the lowest since September 2024. Core inflation, which excludes volatile food and energy prices, also eased to a 2.5-percent annual increase, the smallest rise since March 2021. This downward trend in inflation comes despite ongoing trade tensions and tariff uncertainties stemming from President Trump's trade policies, including a recent court ruling that struck down much of his second-term tariffs before some were reinstated. Consumer and business behavior has been notably responsive to these policy shifts, with increased spending ahead of tariff implementations and cautious investment decisions thereafter. The Federal Reserve remains cautious, with expectations that interest rate cuts are unlikely before September, as inflation inches closer to the Fed's 2-percent target. Overall, the easing inflation rates provide some relief to consumers amid broader economic challenges.