All Eyes on April CPI: Tariffs to Test Inflation Outlook
U.S. April CPI data is about to be released. Trump’s “reciprocal tariffs” officially took effect on April 2, and this inflation report will provide a direct measure of the tariffs’ impact on U.S. inflation. The eyes of the global market are on this data release.
The general market consensus is that the year-over-year increase in April CPI will be around 2.4%, roughly in line with the previous reading. However, the month-over-month growth rate is expected to jump significantly from -0.1% to 0.3%. The core CPI, excluding food and energy prices, is expected to remain flat year-over-year but accelerate on a monthly basis.
Ask Aime: "Will April's CPI reveal Trump's tariffs' inflation impact?"

Due to the impact of tariffs, it is almost certain that the month-over-month CPI will accelerate. However, as long as the increase does not significantly exceed expectations, the market is likely to absorb it. Specifically:
If the CPI rises roughly in line with expectations, markets are likely to breathe a sigh of relief. Combined with better-than-expected progress in trade negotiations, the “shoe has dropped” smoothly, and risk assets could see further support.
If CPI growth falls significantly short of expectations, it would trigger a “celebration moment” in markets. Inflation cooling more than expected, coupled with major breakthroughs in U.S.-China trade talks, would suggest inflationary pressures are rapidly easing. The Federal Reserve would then have a high probability of cutting rates in June, and U.S. equities could challenge new highs.
If CPI rises much more than expected, that would be the worst-case scenario. It would signal that inflation remains stubborn, forcing the Fed to maintain restrictive interest rates for longer, which would weigh heavily on risk assets.
🔍 What Major Investment Banks Are Saying
Goldman Sachs: Categories like apparel, entertainment, and communications may face moderate price pressures; used car prices are expected to decline, helping contain inflation.
Goldman expects core CPI to rise by 0.3% month-over-month in April, up from 0.1% in March. The firm highlights that tariff-sensitive categories (such as apparel, entertainment, and communications) will face moderate upward pressure, but a 0.5% decline in used car prices will help offset inflationary effects.
Wells Fargo: Preventive inventory buildup may help restrain a sharp rise in goods inflation.
The bank's baseline forecast: headline CPI year-over-year at +2.3%, month-over-month at +0.2%; core CPI year-over-year at +2.8%, month-over-month at +0.25%.
Wells Fargo believes that U.S. firms engaging in preventive inventory stocking, along with absorbing some cost increases to maintain consumer demand, may curb inflation expectations from accelerating—at least through May. However, beneath the surface, cooling core service inflation will contrast with gradually strengthening core goods inflation.
ABN AMRO: Reciprocal tariff policy paused after just one week, limiting its immediate impact.
ABN AMRO notes that the reciprocal tariff policy only lasted one week before being paused, thus producing limited initial effects. It expects no significant CPI upside surprise. Retail sales are likely to contract after surging last month, while industrial production should see a modest rebound.
Crédit Agricole: Fed will only cut rates twice in 2024, prioritizing inflation control.
The bank forecasts headline CPI year-over-year at +2.5%, month-over-month flat; core CPI year-over-year at +3.0%, month-over-month at +0.3%.
Crédit Agricole expects tariffs to drive core goods CPI higher, pushing overall core inflation close to 4% by the end of 2025. While markets were once more optimistic than the bank’s forecast, recent implied inflation expectations have converged toward its path. The bank maintains its view that the Fed will cut rates only twice more this year. Even if the April CPI report is in line with expectations, this view remains unchanged.
The Fed faces conflicting pressures from its dual mandate—controlling inflation and supporting employment. Crédit Agricole expects the Fed to prioritize inflation control, whereas markets seem more focused on labor market support, revealing a potential expectations gap.
ANZ: Inflation momentum remains mildly upward.
ANZ points out that the softness in March core CPI stemmed from volatile components such as housing, airfare, and used cars. Its internal diffusion index for core CPI edged higher, suggesting mild upward inflation momentum persists.
According to the Tax Foundation, the average U.S. tariff on imported goods now stands at 25.5%, while Yale’s Budget Lab estimates it at 22.5%—the highest levels since the late 19th century. Both figures indicate that import taxes have risen by at least 20%. Even with substitution effects and margin compression, this will have a significant impact on inflation.
TradingKey: Three of four CPI components are weakening; April CPI likely to undershoot.
TradingKey notes that among the four major CPI subcomponents:
The CRB Food Index’s year-over-year rise may drive food inflation higher. U.S. retail gasoline prices have continued falling, suggesting energy inflation will decline. The Manheim Used Vehicle Value Index has slightly dipped, indicating limited room for transportation inflation. Both the S&P CoreLogic Home Price Index and Zillow Rent Index are weakening, pointing to slower housing-related inflation.
With only food showing upward momentum—and accounting for just 13.7% of CPI weight—while the other three components trend downward, April CPI is likely to fall short of expectations. This would enhance the likelihood of a June Fed rate cut and boost risk asset performance post-release.
Investing in crypto stands to be the best decision I've ever made in my Life. With the help of a trustworthy broker.
I earn huge profits weekly despite the fluctuation of the market..
you can reach out to +.1563.279-8487👍