Consumer Price Index—April 2025

What happened to inflation in April

Annual inflation ticked down to 2.3% in April, its lowest level since February 2021, despite a modest 0.2% monthly increase in the consumer price index from March. From a year ago, inflation declined across key categories, including food and energy. This progress comes amid lingering concerns over tariffs and a cooling economy, which has introduced new uncertainty into the inflation outlook and the path of monetary policy.

What else did we see in the April inflation data?

Core inflation—which strips out food and energy and is often viewed as a better signal of underlying inflation—rose 0.2% over the month, holding steady at 2.8%, the same as the March reading. Shelter inflation, which continues to be a major driver of core inflation, rose by 0.3% month to month, accounting for more than half of the overall increase in all items.

Despite a modest improvement in inflation, economic uncertainty remains high. The Federal Reserve has recently signaled a cautious stance, with Chair Jerome Powell noting the Fed must be attentive to both sides of its dual mandate, as the “risks of higher unemployment and higher inflation have risen” due to tariffs and a slowing economy. 

What does this mean for homebuyers and sellers?

With the spring housing season underway, both buyers and sellers are facing a market where elevated borrowing costs and economic uncertainty temper optimism over lower levels of inflation. Although new listings and inventory are up significantly year over year, pending home sales fell in April, as stubbornly high mortgage rates continued to sideline many buyers.  At the same time, uncertainty around how trade policy will affect future inflation, consumer sentiment, and job growth has muddied the outlook for Fed rate cuts—and, in turn, mortgage rates. Until borrowing costs fall meaningfully, housing activity is likely to remain subdued, even as underlying demand and supply slowly improve.