(WASHINGTON) — Consumer prices rose 2.3% in April compared to a year ago, cooling slightly from the previous month and defying fears of an inflation surge in the aftermath of President Donald Trump’s “Liberation Day” tariffs last month. The reading — which marked the lowest inflation rate since 2021 — matched economists’ expectations.
Egg prices fell 12% in April compared to the previous month, offering some relief for shoppers, data showed. Still, egg prices stand much higher than they did a year ago.
By contrast, gasoline prices dropped 12% over the past year. The nationwide average price of a gallon of gas is $3.15, AAA data shows.
Trump’s tariff escalation, announced April 2, set off concern among economists and consumers about a possible burst of inflation, since importers typically pass along a share of such taxes in the form of price hikes.
Government data on Tuesday showed sharp price increases have not come to pass – at least for now.
However, many analysts anticipate a rekindling of inflation over the coming months as retailers begin to replenish inventory with goods imported after the tariffs took effect.
Even so, a rollback of some levies since “Liberation Day” may soften the impact on inflation.
Trump paused a large swath of so-called “reciprocal tariffs” within days of the announcement.
On Monday, Trump temporarily slashed tariffs on China from 145% to 30%.
Levies on China will remain at the reduced rate for 90 days while the two sides negotiate a wider trade agreement, a joint U.S.-China statement said on Monday. China also agreed to temporarily cut its tariffs on U.S. goods from 125% to 10%.
The rollback of levies on Chinese goods is expected to reduce the average cost of tariffs per household this year from $4,900 to $2,800, the Yale Budget Lab found.
Still, the U.S. continues to impose an array of levies that have been issued since Trump took office.
An across-the-board 10% tariff applies to imports from nearly all countries. Additional tariffs have hit auto parts, as well as steel and aluminum. Duties remain for some goods from Mexico and Canada.
Speaking last week before the rollback of tariffs on China, Federal Reserve Chair Jerome Powell said the economy remains in “solid shape” but warned Trump’s tariff policy could cause higher inflation and an economic slowdown.
“If the large increase in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation and a slowdown of economic growth,” Powell said.
“All of these policies are evolving, however, and their effects on the economy remain highly uncertain,” he added.
Inflation levels are nowhere near 2022’s peak of more than 9% — though it remains slightly higher than the Federal Reserve’s target rate of 2%.
The Fed last week opted to leave interest rates unchanged, keeping borrowing costs elevated as policymakers await the impact of tariffs.
Central bankers will announce their next interest rate decision on June 18. Investors peg an 88% chance of the Fed maintaining interest rates at current levels, according to the CME FedWatch Tool, a measure of market sentiment.
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