Resilience of inflation reappears: Signs of tariff impact emerging, US April CPI expected to rebound.

Notice that US inflation may accelerate in April, having unexpectedly cooled down the previous month, especially with the tariffs imposed on Chinese goods starting to impact prices. According to a survey of economists, the median forecast suggests that the Consumer Price Index (CPI) is expected to rise by 0.3% in April, compared to a decrease in the previous month. The core index, which excludes volatile food and energy categories, is also expected to rise at a similar pace. Most forecasters indicate that the report released by the US Bureau of Labor Statistics on Tuesday will show the preliminary impact of the punitive tariffs imposed on China and other countries last month. The impact may be limited as many imported goods on US shelves last month arrived before the new tariffs took effect. US inflation is expected to accelerate in April Economists like Anna Wong wrote in a report on Monday, "Categories of CPI such as toys, shoes, and clothing, which are heavily imported from China, may experience mild inflation. Retailers find it difficult to pass on price increases without causing a significant drop in demand - although they will still try. If this effect prevails, the net impact of tariffs may not have the inflationary effect as widely believed." Looking ahead, forecasters are still evaluating the recent temporary agreement between the US and China to reduce tariffs on each other's products. Bloomberg Economics wrote that this could lead to a "catch-up period," where retailers are eager to replenish inventory, causing scarcity of goods on US shelves, and potentially driving up consumer prices. US bank economists estimate that inflation in April for goods excluding food and energy is expected to rise by 0.1%, compared to a decline in the previous month. Stephen Juneau and Jeseo Park wrote last week, "Tariffs are expected to slightly increase prices for goods this month, but larger increases are still to come." In this category, they expect car prices to rise, partly due to anticipated tariff-induced price increases and an early release of demand. Other economists forecast that the impact of additional tariffs will be limited. Julien Lafargue, chief market strategist at Barclays Private Bank, stated in a report on Monday that the CPI report is expected to be "largely unaffected" by the tariffs announced by US President Trump on April 2nd. This is because goods already en route to the US have been exempted, and consumers and businesses rushed to buy products earlier this year to avoid tariffs. Lafargue said, "The Fed and global investors will still need a bit more patience to accurately assess the impact of trade uncertainty on consumer prices." In terms of groceries, economists from Morgan Stanley and Wells Fargo Macro point out that egg prices have significantly decreased - a key driver of food inflation in March's CPI data. The decrease in cases of avian flu may provide some relief. Softness in the service industry Economists and policymakers are closely monitoring certain service categories, which serve as indicators of changes in discretionary spending. Economists at Citigroup noted that prices for categories related to tourism, such as airfare and car rentals, have decreased for the second consecutive month. Economists Veronica Clark and Andrew Hollenhorst wrote that the soft prices reported in March, and further declines in April, will support the view of weak tourism demand. The housing category, including rent, the largest category in the index so far, is expected to cool down after a sharp increase in March. Economists from Wells Fargo Macro, Samuel Tombs and Oliver Allen, wrote in a report on Monday, "Looking ahead, we still doubt whether tariffs will prevent service sector inflation from continuing to gradually fade, allowing the Fed to ease policy again in the second half of this year."