Inflation in the U.S. slowed last month for the first time since November 2020, according to a Labor Department report Wednesday.
The consumer price index (CPI), the most commonly used measure to track inflation, fell to 8.3% year-over-year in April from 8.5% in March, a four-decade high, according to a U.S. Labor Department report released Wednesday. Economists had expected April's rate to be 8.1%.
Core inflation, which excludes seasonally volatile food and energy prices, rose 0.6% from March, doubling from the previous month and above the 0.4% economists had forecast.
Bitcoin (BTC) changed hands at $31,638.37 following the release of the report, falling 3.6% in the last 24 hours.
Crypto analysts and traditional economists are watching core inflation particularly closely this month, as inflation figures could be misleading due to the sharp rise in the CPI index last year.
"The annual numbers are going to come down either way," said Eric Winograd, senior vice president and head of economic research for developed markets at AllianceBernstein. "It's not particularly meaningful because it doesn't tell us what prices are really like. It tells us what prices were like a year ago."
Last spring, the CPI index posted a sharp increase from 2.6% in March to 4.7% in April, making it difficult to draw comparisons between this year's March and April figures.
Core inflation, on the other hand, looks at the percentage change from the previous month, so analysts prefer this data point to assess current inflation pressures.
Compared to earlier inflation reports this year, the April report may be less meaningful to traders in general as they track inflation to make assumptions about what the Federal Reserve might do to keep it in check.
"They've already told us their next move," Winograd said. "So it will take something very dramatically different for them to change that path.
Fed Chairman Jerome Powell has already said the central bank will most likely raise rates by 50 basis points (0.5 percentage point) at its next meetings.
President Biden weighs in
Many critics blame President Joe Biden for the worst inflation in 40 years and for deflecting blame for the current economic situation.
With November's midterm elections looming, which will play a major role in how the Federal Reserve handles interest rate hikes in the fall, the president spoke out Tuesday on inflation, assuring Americans that he "takes inflation very seriously and it is my top domestic priority."
"President Biden and the Democrats are likely to have a hard time maintaining their majority in Congress," said Scott MacDonald, chief economist at Smith's Research & Gradings. "An economy in trouble, with a recession or near-recession, tight monetary policy and inflation is not a good tailwind."