US Consumer Prices Rise 4.9% in April, Marking a Slowdown in Inflation

The latest data released by the US Labor Department on Wednesday shows that consumer prices rose 4.9% on an annual basis in April, the smallest year-over-year increase since May 2021. The figure comes in better than economists’ expectations for inflation to remain flat at 5%.[0] The rise in consumer prices marks the first time annual inflation has landed below 5% in two years, extending a monthslong slowdown and bolstering hopes that inflation will continue its return back to normal levels. Compared to a year ago, consumer prices rose 4.9% last month. The Labor Department said that it was the smallest annual cost-of-living increase in two years.[1]

Inflation has been a significant burden for America's consumers for the last two years.[2] The high inflation rate has been an ongoing threat to the economy and a frustrating challenge for the Federal Reserve, which has hiked its key interest rate at the fastest pace since the 1980s to try to slow the economy and put the brakes on price increases.[3] Despite a considerable decrease since reaching a 40-year peak in June, inflation remains significantly higher than the Federal Reserve's desired rate of 2%. Although the nation's inflation rate has decreased steadily since reaching its peak of 9.1% in June, it still remains significantly higher than the Federal Reserve's target rate of 2%.

Despite the economic pressures, there is an uncommonly robust job market.[1] Employers created 253,000 jobs in April, and the unemployment rate dropped to 3.4%, matching a low unseen since May 1969.[4] Although a robust job market is advantageous, it can also be a double-edged sword as increased wages can lead to inflation. The growth of the average hourly wage increased to 4.4% in April.[5] Paying workers more money usually means employers will raise prices on goods and services, which ultimately gets passed down to consumers.

The Fed recently hiked interest rates for the 10th time in a row, bringing rates to a level between 5 and 5.25 percent. The Fed's new benchmark policy rate, the fed funds rate, is now in a range of 5%-5.25%, the highest since September 2007. Due to inflation in the US exceeding the target of 2%, the Federal Reserve has increased interest rates.[6] The central bank has already seen some progress on inflation as the housing market cools.[4] Since Russia's invasion of Ukraine last year, which caused a surge in oil and gas costs, energy prices have also decreased.[4]

At the May meeting, the Fed raised interest rates by 0.25%, which represents the 10th consecutive increase in the cycle. With credit conditions becoming more stringent due to increasing rates, investors are anticipating the Fed's decision to halt its course and allow the effects of the elevated rates to unfold.[7] Last week, the Fed officials hinted that they might consider putting a hold on rate hikes, and if inflation continues to decrease, they could follow through with this plan in June.[8] However, Powell gave a press conference last week where he expressly would not commit to pausing interest rate hikes and expressed befuddlement at what was going on with the job market.[9]

The “core” inflation reading for April, which excludes volatile food and energy prices, increased 5.5% on the year. The outcome was consistent with the predictions made by economists.[9] The rate of core inflation, which does not include the unpredictable costs of energy and food, rose by 5.5%. Prices for used cars and trucks rose 4.4% in April, after falling 0.9% in March. During the pandemic, the inflation rate was initially high due to the demand for used cars, but it eventually decreased.[4] In recent times, the wholesale expenses of pre-owned vehicles have increased again. Experts and decision-makers have been anticipating the impact of these escalating costs on the prices charged to customers.[4] They are beginning to notice it now.[4] After experiencing a decline earlier this year, the cost of pre-owned automobiles and trucks bounced back in April with a 4.4% increase from the previous month.

The monthly rise was primarily driven by the escalation in housing expenses, trailed by the surges in the indices for pre-owned automobiles and gasoline. The government reported that rent prices remained the leading factor in contributing to inflation, surpassing other areas such as the rising costs of cars and gasoline.

0. “Inflation Unexpectedly Ticks Down—But Prices Still Rose 4.9% In April” Forbes, 10 May. 2023,

1. “Inflation stays high in April as the economy faces challenging times” NPR, 10 May. 2023,

2. “US inflation below 5% for first time in two years” BBC, 10 May. 2023,

3. “CPI: Inflation rate falls below 5% for first time since June 2021” CBS News, 10 May. 2023,

4. “Inflation eased in April, even as bank crisis slows economy, CPI figures show” The Washington Post, 10 May. 2023,

5. “Inflation hit 4.9% in April, the lowest it's been in two years” NBC News, 10 May. 2023,

6. “US Consumer Price Index increased 4.9% year over year in April 2023” Business Insider, 10 May. 2023,

7. “Inflation data points to Fed pause on rate hikes” Yahoo Finance, 11 May. 2023,

8. “CPI Inflation Rate Falls Below 5% As Service Prices Cool” Investor's Business Daily, 10 May. 2023,

9. “5 Things to Know About April's Exciting Inflation Report” New York Magazine, 10 May. 2023,

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