The annual rate of inflation in the US, as measured by the Consumer Price Index for All Urban Consumers (CPI-U), stood at 4.9% in April. This is according to data released by the Bureau of Labor Statistics on Wednesday. Inflation on the CPI-U measure has now slowed for ten consecutive months since last June’s peak of 9.1%, with the headline rate now at its lowest level in two years. April’s reading also came in slightly lower than consensus expectations of 5.0%. 

The recent slowdown in the rate of inflation in the US has largely been driven by energy prices. Falling wholesale prices have been key, reducing the upward pressure on inflation from household bills. Indeed, energy’s contribution to April’s inflation rate was negative, with prices being down by 5.1% on the year. This reflects a base effect, given that energy prices began to escalate this time a year ago, as a consequence of Russia’s invasion of Ukraine. Within the energy category, particularly stark annual deflation was seen for motor fuels, for which prices fell by 12.6% on the year. Some energy subcategories continue to see positive annual price growth, however. For instance, electricity prices were up by 8.4% on the year in April, close to twice the headline rate of inflation.

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