Live Updates: April CPI Report and Inflation News

Credit…OK McCausland for The New York Times

Inflation probably cooled slightly for the first time in months in April, though the 8.1 percent annual increase in the Consumer Price Index that economists expect would still be uncomfortably rapid.

Inflation, which climbed by 8.5 percent in March, is expected to begin moderating partly because of a statistical quirk. Increases are now being measured against high price readings from last spring, when inflation began to take off, instead of depressed 2020 levels. That higher base makes annual increases look less severe.

Monthly data are also expected to be slow, thanks in large part to lower gas prices in April compared with March. After taking out volatile food and fuel, however, prices are probably still increasing at a robust 0.4 percent pace on a monthly basis, based on estimates in a Bloomberg survey of economists.

The takeaway is likely to be a nuanced one: Inflation may be decelerating from its highest annual peak, but it is still running at around the fastest rate in four decades. The reality that price gains are no longer picking up may be a small dose of good news for Federal Reserve officials, but it is likely to be overshadowed by the reality that policymakers have a long way to go to bring price increases down to more normal and stable levels.

“We think that the data will help to confirm that we have hit peak inflation,” said Matthew Luzzetti, chief US economist at Deutsche Bank. “While there is a lot of focus on that question, I don’t think it is the most important question.”

Instead, Mr. Luzzetti said, the critical thing is how quickly the price increases moderately going forward. While he and many other analysts expect to see slower price increases or even outright price cuts on some goods, including used cars, it is unclear how quickly supply chain issues will clear. Lockdowns in China and the war in Ukraine threaten to only exacerbate supply shortages for semiconductor chips, commodities and other important products.

Plus, services prices are increasing quickly, as rents climb rapidly and worker shortfalls lead to rising wages and steeper prices for restaurant meals and other labor-intensive purchases.

The Fed is raising interest rates to try to keep inflation from galloping out of control in a lasting way.

As inflation lingers, there is a growing risk that it will become a more permanent feature of the economy. Household and investor expectations for future price increases have been creeping higher, which could help perpetuate fast price gains as households and businesses adjust their behavior, asking for bigger raises and charging more for goods and services.

That is what Fed officials want to avoid. Policymakers raised their main policy interest rate for the first time since 2018 in March, then followed that up with the biggest increase since 2000 at their meeting last week.

By making it more expensive to borrow money, officials are hoping to slow rapid spending and hiring, which could help supply catch up with demand. As the economy returns to balance, inflation should come down.

Central bankers are hoping that their policies will temper economic growth without actually pushing unemployment up or plunging America into a recession. But officials have acknowledged that letting the economy down gently will be difficult, and have suggested that they will be willing to inflict economic pain if that is what it takes to tackle high inflation.

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