The pace of inflation slowed in April, the month that Donald Trump announced his sweeping “liberation day” tariffs on the US’s largest trading partners.
The annual inflation rate was 2.3% in April, down from an annual rate of 2.4% March, according to a new inflation report from the Bureau of Labor Statistics (BLS).
Core inflation, which excludes volatile energy and food prices, hit an annual rate of 2.3% in April, compared to an annual 2.4% increase in March.
While the inflation report covers April, after Trump’s announcement, it comes as businesses are still trying to figure out the impact of the tariffs.
Trump has rolled back most of the tariffs he announced in early April, unveiling trade deals with the UK and China in the last week. But imports from China face a 30% levy and most other US imports still face a 10% levy. Consumers appear to be bracing themselves for higher prices.
Consumer sentiment dropped sharply in April, measured by the University of Michigan’s Survey of Consumers, and expectations of inflation rose to 6.5%, the highest it has been since 1981.
A new Harris/Guardian poll published on Monday found six out of 10 Americans have had to hold off on a major financial goal because of the current economy, an indicator of widespread economic anxiety.
It is unclear how long this pessimism will last. Wall Street rose sharply on Monday after the announcement of a 90-day pause in Trump’s tariff dispute with China. But stock markets have been more reactive to changes to Trump’s tariff policies than consumers.
Economists also expect price increases to get worse this year. Many companies have not had to increase prices yet, as many of the goods being sold now were imported before the new tariffs were implemented.
“There isn’t a lot of evidence of tariffs boosting the CPI in April, but this shouldn’t be surprising as it takes time,” said Ryan Sweet, chief US economist at Oxford Economics, in a statement.
Sweet noted that even though tariff rates have been reduced, rates against China are still high. “The overall US effective tariff rate [for China] is still among the highest since the 1930s, and that will be inflationary,” he said.
Though the pace of inflation has slowed, officials at the Federal Reserve said they expect tariffs to have an impact on prices, even if only temporary.
“Certainly the risk to higher inflation [and] higher unemployment have increased,” the Fed chair, Jerome Powell, said at a press conference last week, adding that tariffs could delay inflation from reaching the Fed’s target rate of 2% by at least a year. “We would, at least for the next, say, year, not be making progress toward those goals if that’s the way tariffs shake out.”
This is contrary to what Trump has been saying about tariffs and the impact they have had on prices. Trump insists that any inflation is a holdover from the Biden administration, though Trump has been in the White House for over three months.
“DRUG PRICES TO BE CUT BY 59%, PLUS!,” Trump wrote on social media Monday. “Gasoline, Energy, Groceries, and all other costs, DOWN. NO INFLATION!!!”
