The US CPI in April was slightly lower than expected, and the impact of tariffs may not have fully manifested yet

On May 13, 2025, the US Bureau of Labor Statistics released the latest data showing that the Consumer Price Index (CPI) rose 2.3% year-on-year in April, slightly lower than market expectations of 2.4% (FactSet data), but still exceeding the Federal Reserve's 2% inflation target, indicating that US consumers are facing sustained price pressures.

On a month on month basis, CPI rose by 0.2% in April, also lower than the expected 0.3%. As an important indicator for measuring changes in consumer goods and service prices, CPI intuitively reflects the impact of inflation on the daily expenses of ordinary households.

From the analysis of constituent factors, housing costs remain the core driving force behind inflation. Despite the decline in gasoline prices, the rise in energy costs such as natural gas and electricity still supports overall energy spending and maintains price pressure.

The economic community is closely monitoring the actual transmission effect of the Trump administration's tariffs. As tariffs act as taxes in the import process, companies often pass on additional costs to end consumers, which means that the related impacts may gradually manifest in future consumer prices.

Federal Reserve Chairman Jerome Powell recently stated that the central bank will adopt a "wait-and-see" attitude towards the impact of tariffs and warned that tariff policies may exacerbate inflationary pressures and suppress economic growth. However, the current economic data has not significantly reflected the tariff effect, partly due to the lag in tariff transmission.

In terms of background, the "Liberation Day" tariff policy announced by Trump in early April was adjusted on April 9th, with most countries' tariffs suspended for 90 days and a unified benchmark tax rate of 10%. On Monday of this week, the United States reached a temporary trade agreement with China, significantly reducing some of its previous import tariffs to provide space for easing trade tensions.

It is worth noting that many companies and consumers accelerated their purchases before the tariffs officially came into effect to avoid future tax burdens, which may have resulted in the April CPI data not fully reflecting the price pressure of tariff increases.

Julian Lafarge, Chief Market Strategist at Barclays Private Bank, analyzed in an email that "the CPI data for April was largely unaffected by the 'Liberation Day' tariff policy, which exempts goods shipped before April 2, and a large amount of consumer activity and purchases were completed ahead of schedule in February and March. ”He added, "The Federal Reserve and global investors need to be patient before fully assessing the actual impact of trade policy uncertainty on US consumer prices

Overall, despite slightly better than expected inflation data in April, the price risks caused by trade frictions have not been eliminated, and the market remains cautious about future inflation trends.