finance
U.S. Consumer Prices Rose 3.8 Percent Annually in April
Consumer expectations for higher unemployment reached the highest level in 12 months in April while year-over-year inflation climbed to 3.8 percent, exceeding forecasts. Food, shelter, apparel and airline fares drove price increases as real wages declined. The data arrives as the Federal Reserve holds rates steady amid mixed signals on the economy.
May 12, 5:07 PM·2m read5 sources
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U.S. consumer prices rose 3.8 percent annually in April, the highest reading since May 2023 and above the 3.7 percent consensus forecast. Food-at-home prices posted their largest monthly gain since August 2022, climbing 0.7 percent. Shelter costs increased 0.6 percent while apparel rose 0.6 percent and airline fares jumped 2.8 percent, pushing the 12-month gain in that category to 20.7 percent.
Household furnishings and operations increased 0.7 percent. Energy prices have drawn attention after oil rose above $100 a barrel and the national average gasoline price reached $4.50 a gallon. New vehicle prices fell 0.2 percent, used cars and trucks were unchanged, medical care costs declined 0.1 percent, hospital services fell 0.3 percent and health insurance declined 0.4 percent.
Consumer sentiment readings showed rising concern about the job market. The perceived probability among U.S. consumers that they will be unemployed in the next 12 months climbed 10 percentage points since the start of 2025. Separately, 61 percent of consumers expect unemployment to increase over the next 12 months, a level the University of Michigan Surveys of Consumers said has never occurred outside of a recession.
Real average hourly wages slipped 0.5 percent for the month and fell 0.3 percent over the past year.
Stock market futures turned negative after the inflation data while Treasury yields rose. Traders increased the probability of a Federal Reserve rate hike by the end of the year to roughly 30 percent. The central bank has held its benchmark interest rate steady throughout the year.
One governor voted for a rate cut while three regional bank presidents objected to language markets interpreted as signaling a future easing. Incoming leadership has expressed support for lower rates.
The Atlanta Fed's GDPNow model points to 3.7 percent annualized growth in the second quarter, though based on limited data. Corporate earnings have been robust and hiring has picked up from near-stagnant levels in 2025. Consumer spending has held up so far, driven largely by higher-income households. Many consumers have benefited from tax refunds this year.
