A widely watched measure of inflation rose in April despite more than a year of Fed rate hikes.
The consumer price index, which measures the cost of a broad range of goods and services, rose 0.4% this month, in line with the Dow Jones estimate, according to a report from the Labor Department on Wednesday.
However, this equates to an annual increase of 4.9%, slightly below the 5% estimate.
Excluding the volatile food and energy categories, the core CPI rose 0.4% monthly and 5.5% year-on-year, both in line with expectations.
Gains in housing, gasoline and used cars pushed the index higher, but were partly offset by falls in fuel oil, new cars and domestic food prices.
Markets reacted positively to the news, with futures turning bullish as U.S. Treasury yields moved lower.
Inflation has persisted despite the Federal Reserve’s efforts to keep prices down. Since March 2022, the central bank has raised interest rates 10 times in a row, accumulatively raising interest rates by 5 percentage points, and the benchmark borrowing rate has risen to the highest level in nearly 16 years.
Since peaking around 9% in June 2022, CPI readings have cooled off considerably. However, inflation remains well above the Fed’s 2% annual target.
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