April US CPI Slows Down... Economists Say "Tariff Impact from June to July"

Companies Do Not Raise Prices Due to Pre-Tariff Shipments

"Trump Tariffs Still at Highest Levels in Decades"

Rate Cut Possibility Priced from July to September

April US Consumer Price Index (CPI) rose 2.3% annually, the smallest increase since 2021, as the impact of tariffs was limited.

According to data released by the Bureau of Labor Statistics on the 13th (local time), the core consumer price index, excluding volatile food and energy sectors, rose 0.2% from March. Compared to April last year, it rose 2.8%, maintaining the same level as the previous month. The headline CPI rose 2.3% on an annual basis. This matches the economists' expectation compiled by Dow Jones that the headline CPI would rise by 0.2%.

The core CPI, excluding volatile food and energy, rose 0.2%, less than the economists' expected 0.3% increase.

Some economists expected the impact of Trump's tariffs to appear partially from April. However, US companies have advanced shipments before tariffs, holding large inventories and have not yet raised consumer prices. Therefore, the impact of tariffs on April consumer prices seems limited.

According to MarketWatch, Omair Sharif, founder and CEO of Inflation Insights, said, "The price increase due to mutual tariffs that began in earnest from April will mostly occur from June and July." He explained that during Trump's first term in 2018, it took about two months for the price increase of imported goods to be passed on to consumers after raising tariffs.

Economists at BMO Capital Markets expect that if the 25% tariff on imported cars raises used car prices within a month or two, the core consumer price index (CPI) could rise again in the future.

Sharif said that if the tariff on Chinese goods set at 30% this weekend remains unchanged, the annual core CPI could peak at 3.5%. He also predicted that the price increase for cooling products could be detected by August.

Joe Brusuelas, chief economist at RSM, said, "If US companies face a significant increase in import costs, they will eventually pass it on to consumers."

Overall, economists expect the high tariffs announced by President Trump in April to lead to inflation with a 2-3 month lag.

The Trump administration has deferred most tariffs for 90 days after the 'Day of Liberation' announcement, but economists expect US consumers to pay more for various goods. Currently, US tariffs are still at the highest levels in decades.

This week, the Trump administration's deferral of a 115 percentage point tariff on Chinese imports with high import ratios for 90 days is seen as reducing the threat of recession. If negotiations with many trading partners lead to an overall reduction in tariff levels, the impact on US consumer prices could be significantly reduced.

After the April consumer price announcement, US Treasury yields fell overall. Nasdaq futures in the New York stock market rose 0.2%, while Dow futures fell 0.5%. S&P 500 futures fluctuated.

With the US-China tariff truce on Monday, rate futures traders have lowered their expectations for a Fed rate cut, expecting about two rate cuts this year. According to CME Group's FedWatch tool, the swap market has priced in the first rate cut in September from the first rate cut in July as of last week.

Some Federal Reserve officials have stated that they are not willing to cut rates until they believe inflation due to tariffs has peaked.

Guest reporter Kim Jung-ah kja@hankyung.com