2026-06-11
US April Core CPI Flat at 2.8%, Stagnant Inflation Cooling Tests Rate Cut Expectations
According to the latest data from DataTrack, the US core CPI annual growth rate for April 2026 (Q2 2026) was reported at 2.8%, completely flat compared to the previous month's value of 2.8% in March. This data indicates that after excluding highly volatile food and energy, the cooling momentum of core inflation has temporarily stalled. Compared to the market's attention on the April overall CPI rising to 3.8% (higher than the expected 3.7%), the core data, although stable, has still failed to move further closer to the Federal Reserve's 2% target.
Observing the inflation sub-categories, although commodity prices are relatively controlled, the key to the core CPI's difficulty in effectively falling back remains in "services" prices, particularly the heavily weighted shelter costs, which have demonstrated strong stickiness. On the other hand, external market information shows that the rebound in energy prices has already exerted massive upward pressure on overall inflation. This spillover effect is testing whether core inflation can remain stable in the coming months.
Delving deeper into the performance of this wave of data, analytical institutions generally believe that a strong job market and macroeconomic resilience are the main reasons why inflation is hard to bring down. For instance, a WebTech360 report points out that the US economy was robust in the first quarter, coupled with an ICICI Bank report highlighting the boost from rising energy and food prices, causing consumer demand to not decline as expected. The underlying strength of this "no landing" economic scenario has led to an unshakeable stickiness in services and wage-related inflation.
In terms of outlook and risks, in the short term (1-2 months), the recently released May non-farm payrolls data was unexpectedly hot. Coupled with the fear that overall inflation may surge further due to oil prices, expectations for a Federal Reserve rate cut are facing the test of a significant revision. In the medium term (3-6 months), if Middle East geopolitical risks and energy shocks continue to persist, core inflation might even be forced to resume an upward trend. The market needs to closely guard against the potential risk of the Federal Reserve returning to a "Higher for Longer" policy.
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