Key Takeaways:
- CPI
Data: 4.9% YoY, 0.4% MoM
Forecasted: 5.0% YoY, 0.4% MoM
- Core CPI
Data: 5.5% YoY, 0.4% MoM
Forecasted: 5.5% YoY, 0.4% MoM
- Inflation falls below 5% for the first time since 2021.
The most recent data for April shows that the CPI increased by 4.9 percent compared to the previous year, slightly lower than the anticipated 5 percent predicted by economists. Notably, inflation has significantly declined from its peak of slightly over 9 percent during the summer of last year. This marks the first time in the last two years that annual inflation has been lower than 5%.
On a monthly basis, the rate of inflation increased by 0.4%, which was larger than the 0.1% increase seen in March. These figures indicate a moderate rise in consumer prices, although it is worth noting that core prices, which exclude volatile food and energy categories, saw a decrease in the annual rise from 5.6% to 5.5%.
The increase in core prices (Core CPI) from March to April was 0.4%, following a rise of the same magnitude the previous month. Core prices remove volatile food and energy categories and capture longer-lasting trends. This resulted in a decrease in the annual rise from 5.6% to 5.5%.
Factors contributing to the decline
The most recent data from the Bureau of Labor Statistics revealed some additional positive developments, including the following: The price of food only increased by 7.7% over the previous year, marking the eighth consecutive month of reduced overall price increases. And on a month-to-month basis, the costs of food really went down.
The price hikes slowed down during the previous month, despite the fact that petrol prices increased and rent prices continued to climb at a pretty rapid pace. The cost of traveling, purchasing a new automobile, and a gauge of the cost of medical treatment all went down in April, which contributed to the overall reduction in inflation.
The Fed’s next move
The Federal Reserve will likely pay close attention to the April inflation report. Over the past year, the Fed has increased interest rates at a relatively fast pace in an effort to curb lending and stabilize the economy. However, with borrowing costs now over 5 percent, policymakers have signaled that they may suspend rate hikes as early as their meeting in June. Nonetheless, the Fed’s objective to return the economy to a 2 percent inflation rate remains in play, and it is expected to take several more months to achieve this goal.
Crypto markets
The release of the CPI report had a momentary and insignificant impact on the value of cryptocurrencies.
Bitcoin saw a 2.35% increase, reaching a local high of $28,300, while Ethereum experienced a 1.6% daily increase, reaching $1886.
Investors became more bullish after the report showed a slower annual inflation rate in April than predicted by economists. However, within a few hours, the price of Bitcoin unexpectedly fell below $27,000, resulting in approximately $100 million worth of liquidations.
This drop was driven by the fear, uncertainty, and doubt (FUD) caused by mistaken rumors that the US Government, which holds a significant amount of Bitcoin related to Silk Road, was planning to sell their holdings.
Final Thoughts
The April CPI report provides some positive developments, indicating a slowdown in inflation. The Fed will closely analyze these figures as they make decisions regarding interest rates and their objective of achieving a 2 percent inflation rate. Meanwhile, the crypto market experienced a brief boost followed by a decline in prices, influenced by the CPI report and external factors. It is essential for investors to remain vigilant and consider a range of factors when assessing market trends.
Rickie Sanchez is an article writer specializing in cryptocurrency news. Since late 2017, he has been actively investing in cryptocurrencies. He is enthusiastic about everything that has to do with crypto and he hopes that the readers of his articles in the years to come will gain a massive understanding of blockchain technology.
