CPI report shows inflation easing in April, with consumer prices still rising 3.4% from a year ago

Inflation eased slightly in April, providing at least a bit of relief for consumers while still holding above levels that would suggest a cut in interest rates is imminent.

The consumer price index, a broad measure of how much goods and services cost at the cash register, increased 0.3% from March, the Labor Department's Bureau of Labor Statistics reported Wednesday. That was slightly below the Dow Jones estimate for 0.4%.

On a 12-month basis, however, the CPI increased 3.4%, in line with expectations.

Excluding food and energy, the key core inflation reading came in at 0.3% monthly and 3.6% on an annual basis, both as forecast. The core 12-month inflation reading was the lowest since April 2021 while the monthly increase was the smallest since December.

Markets reacted positively after the CPI release, with futures tied to major stock indexes rallying and Treasury yields tumbling. Futures traders raised the implied probability that the Federal Reserve would start cutting interest rates in September.

"This is the first print in a month that wasn't hotter than expected, so there's a relief rally," said Dan North, senior economist at Allianz Trade North America. "The excitement is a little overdone. This is not Caitlin Clark. She's exciting, this is not exciting."

In other economic news Wednesday, the Commerce Department reported that retail sales were flat on the month, compared with the estimate for a 0.4% increase. That figure is adjusted for seasonality but not inflation, suggesting consumers did not keep up with the pace of price increases.

For the inflation report, price gains on the month were driven heavily by rises in both shelter and energy.

Shelter costs, which have been a particular trouble spot for Federal Reserve