In April, the consumer price index (CPI) increased by 0.2% monthly and 2.3% annually, the lowest annual inflation rate in over four years. Core CPI, which excludes food and fuel prices, also rose 0.2% in April, reaching an annual rate of 2.8%. Several factors account for the subdued inflation figures despite new tariff policies. Historically, a lag exists between tariff implementation and inflation increases. For instance, after tariffs on $200 billion of Chinese imports were raised in May 2019, inflation only saw a modest rise. Businesses anticipating higher tariffs had stocked up inventory, delaying potential price hikes for consumers. Additionally, decreased consumer confidence and retail spending driven by tariffs likely contributed to lower prices. Market expectations suggest the Federal Reserve will hold interest rates steady at the upcoming June meeting, indicating that the full impact of tariffs may not yet be felt.

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