The annual inflation rate in the U.S. dropped to 2.3% in April, which is the lowest level since February 2021. This figure was better than many experts had predicted, as they expected a rate of 2.4%. The Labor Department reported that the consumer price index increased by a seasonally adjusted 0.2% from March to April. While this marks a rise from the previous month’s 0.1% decline, it still reflects a positive trend for the economy.
President Donald Trump welcomed this news shortly after implementing new tariffs, which he dubbed "Liberation Day" tariffs. The White House took to social media to celebrate the lower inflation rate, attributing it to what they called the “TRUMP EFFECT.” Labor Secretary Lori Chavez-DeRemer noted that families have been struggling with rising costs, but this report suggests that Americans are starting to feel some relief.
Food prices saw a slight decrease of 0.1% from March to April, with the price of eggs falling dramatically by 12.7%. Used car prices also dropped during this period. On the other hand, energy prices rose by 0.7%, and shelter costs increased by 0.3%. New car prices remained stable. Over the past year, energy costs have decreased by 3.7%, with gasoline prices down 11.8% and fuel oil prices falling by 9.6%. However, electricity and natural gas prices have seen increases of 3.6% and 15.7%, respectively.
This inflation report coincides with progress in trade negotiations between the U.S. and China. The Trump administration announced plans to reduce tariffs on Chinese goods to 10% for 90 days, while maintaining a 20% tariff on fentanyl imports. In exchange, China will also lower its retaliatory tariffs on U.S. products to 10%. These changes are set to take effect soon as both nations continue discussions.
Additionally, Trump reached an agreement with the United Kingdom, allowing more access to the British market while keeping a 10% tariff on U.K. imports. The U.K. will be permitted to export up to 100,000 vehicles to the U.S. under this agreement, which is a reduction from a previous 25% tariff on foreign auto imports.
Some economists believe that the impact of Trump’s tariffs may not be fully reflected in economic data until later in the summer. As the situation unfolds, many are keeping a close eye on how these changes will affect the economy moving forward.