Inflation's Uncertain Path Amid U.S.-China Trade Tensions

U.S. consumer prices saw a moderate uptick in April, with inflation hitting the lowest annual rise in four years. Despite the easing trade tensions with China, the inflation outlook is murky due to tariffs. The Federal Reserve is expected to maintain its current policy direction.

April witnessed a moderate rebound in U.S. consumer prices, marking the smallest annual inflation increase in four years. This muted rise, reported by the Labor Department, fell below economists' expectations, strengthening predictions that the Federal Reserve's interest rate-cutting cycle would remain on hold until late summer.

The monthly Consumer Price Index (CPI) rose by 0.2%, following a 0.1% dip in March. Economic sectors reflected mixed trends: shelter costs drove CPI gains, while grocery prices fell sharply, notably with a significant drop in egg prices. Fuel prices showed mixed patterns, and tariffs on Chinese imports continued to weigh on consumer markets.

Looking forward, economists anticipate a rise in inflation due to enduring tariffs, though less dramatically than previously predicted. This stems from both temporary trade agreements and the ongoing U.S.-China tariff war. Despite a 90-day tariff truce, inflation pressures remain, affecting the monetary stance of the Federal Reserve.

(With inputs from agencies.)