US Inflation Slows in April Despite Trump's Tariff Announcements

TLDR

Table of Contents

US annual inflation rate dropped to 2.3% in April from 2.4% in March
Core inflation (excluding food and energy) was 2.8% annually
Trump announced significant tariffs in April but later rolled back many through trade deals
Consumer sentiment fell sharply with inflation expectations rising to 6.5%
Despite tariff concerns, companies haven’t yet widely passed costs to consumers

The pace of inflation in the United States slowed slightly in April, the same month that President Donald Trump announced his sweeping “liberation day” tariffs on major trading partners. According to the latest Bureau of Labor Statistics (BLS) report, the annual inflation rate was 2.3% in April, down from 2.4% in March.

Core inflation, which excludes volatile food and energy prices, reached an annual rate of 2.8% in April, unchanged from the previous month. This comes as a surprise to many economists who expected tariffs to cause immediate price increases.

🚨 BREAKING:
April CPI inflation drops to 2.3% (below forecast)
Core CPI at 2.8% (as expected)
3rd straight month of falling inflation📉
The S&P 500 E-Mini Futures $ES jumped 21 points on the news… pic.twitter.com/uccDzGynDm
— Trader Edge (@Pro_Trader_Edge) May 13, 2025

The monthly data showed softer-than-forecast price growth for the third consecutive month. The consumer price index increased just 0.2% from March, less than economists had predicted.

Many consumer goods showed tame price behavior in April. Clothing prices fell, new car prices remained flat, and grocery prices declined for the first time in almost a year. Egg prices saw their biggest drop since 1984.

However, prices of furniture and appliances — products that are largely imported — jumped in April, possibly showing early impacts of the tariff policies.

Consumer Sentiment Drops

Despite the modest inflation figures, Americans are showing signs of economic anxiety. Consumer sentiment dropped sharply in April, as measured by the University of Michigan’s Survey of Consumers.

Inflation expectations rose to 6.5%, the highest level since 1981. A Harris/Guardian poll found that six out of ten Americans have postponed major financial goals because of the current economy.

Many households appear to be bracing for higher prices in the coming months as tariffs take full effect.

Tariff Implementation and Rollbacks

President Trump has walked back many of the tariffs he announced in early April. He unveiled trade deals with the UK and China in recent days.

The agreement with China provides a 90-day pause in the trade dispute. This temporary agreement brought combined US levies on most Chinese imports down from 145% to 30%.

Despite these rollbacks, imports from China still face a 30% levy, and most other US imports face a 10% tax. Economists note that the overall US effective tariff rate for China remains among the highest since the 1930s.

The Federal Reserve is closely monitoring the situation. Fed Chair Jerome Powell said at a recent press conference that “the risks to higher inflation and higher unemployment have increased.”

Powell added that tariffs could delay inflation from reaching the Fed’s target rate of 2% by at least a year.

Many companies have not yet raised prices, as many goods currently being sold were imported before the new tariffs were implemented. Ryan Sweet, chief US economist at Oxford Economics, noted, “There isn’t a lot of evidence of tariffs boosting the CPI in April, but this shouldn’t be surprising as it takes time.”

Companies from Nintendo to Procter & Gamble have suggested they’ll try to pass tariff costs to consumers. However, their pricing power remains unclear as consumer demand shows signs of weakening.

Meanwhile, President Trump has taken to social media to claim victory on prices. “DRUG PRICES TO BE CUT BY 59%, PLUS!” Trump wrote on Monday. “Gasoline, Energy, Groceries, and all other costs, DOWN. NO INFLATION!!!”

The April inflation report shows a more nuanced picture. While the annual rate did decline slightly, many economists expect price increases to accelerate in the coming months as tariff effects work through the supply chain.

For now, the Federal Reserve is keeping interest rates on hold due to uncertainty about how tariffs will impact the economy. Many economists believe the pause with China lowers the risk of a US recession but expect tariffs to keep inflation above the Fed’s target.

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