The U.S. Federal Reserve in May warned that America is facing an increased risk of stagflation. Inflation data for April somewhat assuages that fear.

CPI shows the 2% inflation target nearing, hinting at possible Fed rate cuts. Explore key market reactions and what this means for your investments.

Broken down by category, some of the sectors most impacted by tariffs saw a price decline from last month, including apparel and used cars and trucks.

News that the U.S. and China have drastically reduced reciprocal tariffs for 90 days as they continue trade talks has already put a dent in rate-cut expectations.

Prices for other foods declined in April. Inflation in the fresh fruits and vegetables group dropped by 0.7%, with lettuce and tomato prices both down by over 6%. Dried beans, peas and lentils, however, were up by nearly 6%, underscoring the volatile nature of food prices.

Consumer prices were up 2.3% in April from a year earlier, the Labor Department reported Tuesday.

WASHINGTON, DC, US — The Consumer Price Index for baked foods and cereal products decreased 0.7% in April, according to the Bureau of Labor Statistics of the US Department of Labor. The index for all food at home also fell, easing 0.3%.

CPI rose by 0.2% for the month, lowering the 12-month trend rate to 2.3% – the lowest trend rate since February 2021.