The US inflation data will be one of the key indicators that global investors are looking at this week. The April US CPI data will be released by the U.S. Bureau of Labor Statistics on May 13, 2025, at 8:30 A.M. Eastern Time or 6 pm IST.
The April inflation numbers are expected to give some insights into the effect of tariffs that could have impacted the prices. Even though the reciprocal tariffs were paused, the 10% tariff on almost all nations is in place.
Powell, the head of the US Federal Reserve, will be vindicated if inflation spikes or stays sticky on the upper side. Powell and many other economists feel that tariffs could be inflationary, so a rate cut should be delayed.
Trump has been urging Powell to immediately go for a rate cut. Powell, however, waits for convincing data that can help the FOMC make a decision. Therefore, if the April inflation number shows a decline, the pressure on Powell will likely increase to go for the rate cut. The next FOMC meeting is on June 17-18.
The April US CPI numbers are expected to show inflation rising by 2.3%, the lowest inflation since February 2021, after rising 2.4% annually in March. Core inflation, which excludes volatile prices for food and energy, is expected to rise 2.8% over the year, the same as in March.
Will Tariff impact be seen in April CPI data?
Not to the full extent. Much of the tariffs announced were not enacted until April and some businesses had stockpiled products from abroad before the tariffs went into force, giving them some financial leeway to wait and see if the levies remained in place before raising their prices.
Economists and analysts have a mixed review of the tariff’s impact on inflation.
Goldman Sachs estimates that Trump’s tariffs could potentially reintroduce inflation levels not seen since the post-pandemic price surge. Goldman economists predict that tariffs could increase annual inflation by 3.8% by December, the highest since 2023.
Fed Chair Jerome Powell expressed a positive opinion on the underlying inflation picture following the Fed’s decision to maintain its key interest rate.
The implementation of tariffs is taking its own sweet time. After the 90-day pause in reciprocal tariffs, the US-China tariffs have also been paused for a similar period starting May 14. However, the 10% tariffs remain in place. How tariffs have impacted inflation in April will be revealed today at 6 pm.
US Markets Today
US stock futures slipped on Tuesday as investors cautiously awaited the latest Consumer Price Index report for clues on how the new tariff regime is influencing inflation. Markets are also looking ahead to upcoming retail sales and producer price data later in the week for further insights into the health of the economy.
In Monday’s regular session, stocks posted strong gains, with the Dow climbing 2.81%, the S&P 500 rising 3.26%, and the Nasdaq Composite soaring 4.35%.
The rally was fueled by news that the US and China agreed to temporarily reduce their respective tariffs to 30% and 10% for 90 days, easing concerns of an extended trade war and a potential recession. Treasury Secretary Scott Bessent indicated plans to meet with Chinese officials in the coming weeks to begin discussions on a broader trade agreement. Megacap tech stocks led the market higher, with notable gains from Tesla (+6.8%), Nvidia (+5.4%), Amazon (+8.1%), Meta (+7.9%), and Apple (+6.2%).