What’s going on here? US inflation came in lower than expected in April, despite many economists bracing for the start of tariff-ied prices. What does this mean? Consumer prices picked up by 0.2% between March and April, a little below the 0.3% expected. What’s more, annual inflation slowed to 2.3% – its lowest level since early 2021. Take out volatile categories like food and energy, and the resulting “core” inflation was more palatable than predicted, too. Analysts thought they’d see price rises start to spike instead, believing US tariffs would have bumped up the cost of clothing, cars, home goods, and the like. Nope. It seems many retailers avoided tinkering with price tags, perhaps able to sell existing, pre-tariff stock for less – or maybe just worried about alienating cost-conscious buyers. Why should I care? Zooming in: Don’t break out the champagne yet. April’s inflation print was a pleasant surprise, but the relief may not last. Many economists, including Bank of America’s, have warned that the worst is yet to come. Once businesses run out of old inventory, they’ll pass on some of their levy-laden restocking costs to customers – meaning prices will likely rise. And while the recent deal between China and the US tamped down tariffs, they’re still historically high. So unless a better and lasting agreement follows, inflation could still do damage – just later down the line. The bigger picture: Slow inflation is still inflation. Americans are paying roughly 27% more on average than in 2020. And unless the country sees a period of deflation, those higher costs will stick. No wonder folks’ financial confidence is still low, despite stock markets showing signs of optimism from investors. Americans are forking over more and more for the basics – from groceries to shelter – and households without investment windfalls or major pay raises will be feeling the pinch extra hard. | 