US consumer inflation resumes downward trend as domestic demand cools

U.S. consumer prices increased less than expected in April, suggesting that inflation resumed its downward trend at the start of the second quarter in a boost to financial market expectations for a September interest rate cut.

Hopes of the Federal Reserve starting its easing cycle this year were further bolstered by other data on Wednesday showing retail sales were unexpectedly flat last month. The reports suggested that domestic demand was cooling, which will be welcomed by officials at the U.S. central bank as they try to engineer a “soft-landing” for the economy.

“The economic data are picture perfect in favor of interest rate cuts,” said Christopher Rupkey, chief economist at FWDBONDS. “The country is not out of the woods from the threat of inflation, but we can start to see the end of the forest.”

The consumer price index rose 0.3% last month after advancing 0.4% in March and February, the Labor Department’s Bureau of Labor Statistics said. The higher cost of living has detracted from the economy’s resilience, and is a campaign theme for the Nov. 5 presidential election.

 

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