US inflation slows broadly in April

US consumer price gains eased in April, with core inflation posting the smallest gain in three years, signs the economy is slowing in the face of high borrowing costs.

The consumer price index (CPI) rose by an annual 3.4pc in April, easing from 3.5pc over the prior 12-month period, the Labor Department reported on Wednesday. Core CPI, which strips out volatile food and energy, rose by 3.6pc, slowing from 3.8pc the prior month.

The easing inflation comes as the Federal Reserve has pushed back the expected start of interest rate cuts after holding its target rate at a 23-year high since July 2023 as the US economy has continued to grow and generate jobs at greater than expected rates. Job growth however slowed to 175,000 in April, the lowest since October 2023, and job openings and wage gains have also slowed while a measure of manufacturing has contracted.

The CME FedWatch tool boosted the probability of Fed rate cuts in September to about 72pc today from about 65pc on Tuesday.

The energy index rose by 2.6pc over the 12 months ended in April, accelerating from 2.1pc. The gasoline index slowed to an annual 1.2pc in April from 1.3pc

The food index rose by an annual 2.2pc, matching the prior month. Shelter slowed to 5.5pc from 5.7pc.

Services less energy services slowed to 5.3pc from 5.4pc. Transportation services accelerated to an annual 11.2pc, led by insurance costs, from 10.7pc in the 12 months through March.

On a monthly basis, CPI inflation slowed to 0.3pc in April from 0.4pc the prior two months. Core inflation slowed to 0.3pc from 0.4pc the prior three months. Energy held flat at a monthly 1.1pc.

Services less energy services slowed to a monthly 0.4pc gain from 0.5pc.

By Bob Willis