Inflation reports: where dreams go to die. But after three months of higher-than-expected inflation, consumers can finally breathe a sigh of relief. April’s core consumer price index (CPI), which is a broad measure of the cost of goods and services excluding volatile food and energy costs, only increased by 0.3% from the previous month — marking the first year-over-year decline in six months. Overall CPI also saw a modest 0.3% monthly rise, which was lower than the expected 0.4%. And again, shelter costs, the largest component of the CPI index, remained high:

• Shelter prices climbed by 0.4% for the third consecutive month — indicating that housing expenses are still keeping inflation above the Fed’s 2% target.
• Other notable gainers include car insurance, which has been rising at its fastest annual rate since 1976, and apparel, which has grown by 1.2% in April.

So… what about those rate cuts? While one month of improvements isn’t likely to prompt immediate rate cuts from the Fed, it’s a step in the right direction. Charles Schwab’s chief fixed-income strategist said, “It does open the door to a potential rate cut later in the year” (BBG). Analysts worldwide are predicting the first rate cuts will come in the UK and Canada as early as June. However, in the US, though indicators suggest at least two cuts by year-end, the timing of their implementation remains uncertain.