The United States CPI (Consumer Price Index) data for the month of April is in. According to the Bureau of Labor Statistics (BLS), inflation in the U.S. fell to 4.9% in April 2023. This comes on a positive note, falling steadily from March‘s 5%.
As per the BSL, All Urban Consumers (CPI-U) rose 0.4% in April on a seasonally adjusted basis, after increasing 0.1% in March.
The monthly increase was primarily caused by housing. Housing was followed by increases in the index for fuel and used automobiles and trucks. The energy index gained 0.6% in April as a rise in the gasoline index more than offset drops in other energy component indices. The food index remained constant from March to April. The index for food consumed at home decreased by 0.2% while the index for food consumed away from home increased by 0.4%.
How will the Fed react to the April US inflation numbers?
In its previous FOMC meeting, the FED did not disclose if it will increase, decrease or pause interest rates. Fed Jerome Powell stated that we are getting close to, or may even be done with rate hikes. However, given that inflation numbers have gone down, it is possible that the FED will take a cooler outlook. This may lead to a pause in interest rate hikes. Investors might breathe a sigh of relief and amp up investments. However, the FED has set an inflation target of 2%, and the current figures are twice the number.
The latest inflation numbers might bring some positive price actions in the crypto market, which is on a back foot since its gains in April. Bitcoin (BTC) has fallen below $28k. We may see BTC gain some momentum as investors feel more at ease with the latest data.
Since the 40-year highs reached last summer, the rate of price increases has significantly decreased. Investors have long gambled that a halt in its efforts to reduce inflation would be followed by a series of rate declines. Nonetheless, Powell indicated last week that if prices take time to drop, it might not be wise to lower rates.