U.S. Inflation Drops in April Despite New Tariffs, But Higher Consumer Prices Expected by Summer

U.S. inflation eased for the third straight month in April, offering temporary relief to consumers and businesses. Despite new import tariffs imposed by the U.S. government, the latest data shows that overall consumer prices are rising more slowly. However, economists warn that this trend may not last. As the full effects of the U.S. President’s trade policies unfold, many expect inflation to accelerate again by summer. The current slowdown reflects short-term factors, but the long-term outlook remains uncertain amid ongoing tariff pressures and supply chain concerns across the U.S. economy.

U.S. Inflation Slows in April, but Rising Prices Likely by Summer

Inflation in the U.S. slowed down for the third month in a row in April 2025, even after some new tariffs took effect. But experts say this relief may be temporary. They expect prices to rise again in the coming months as the full impact of tariffs hits the economy.

April Inflation at 2.3% – Lowest in Over 4 Years

According to the U.S. Labor Department, consumer prices in April were 2.3% higher than a year ago. That’s slightly down from March’s 2.4% and marks the smallest annual increase in more than four years. From March to April, prices rose by just 0.2% after falling slightly in March — the first monthly drop in five years.

This slower inflation came as a surprise because some of President Donald Trump’s tariffs started in early April. But the full effect of these tariffs isn’t expected to show up in prices until later this summer.

Food Prices Fall — A Relief for Families

One bright spot in the report was grocery prices, which fell by 0.4% in April. That’s the biggest drop in food prices since September 2020. Egg prices saw a huge drop of 12.7%, the largest in 41 years in U.S . However, eggs are still nearly 50% more expensive than they were last year.

Despite fears that food costs would rise due to tariffs on goods from Mexico, overall grocery prices fell, giving families a little more room in their budgets.

Clothing, Cars, and Computers: Mixed Price Changes

• Clothing prices fell 0.2% in April.
• New car prices stayed the same.
• Computer prices increased slightly by 0.3%, possibly due to tariffs since many electronics are imported from China.
• Sporting goods, toys, and items like baby strollers and car seats also got more expensive.

These categories suggest that some of the early tariffs are beginning to push prices up.

Why Haven’t Tariffs Hit Hard Yet?

Many companies stocked up on goods before the tariffs took effect, hoping the trade tensions would ease. This has helped delay price increases. But experts warn that more price hikes are coming in May, June, and July.

Laura Rosner-Warburton, an economist and co-founder of MacroPolicy Perspectives, said, “It’s early days for tariff effects. There are plenty of price increases already scheduled and on the way.”

Core Inflation Stays Steady

Core inflation — which excludes food and energy prices — rose by 2.8% in April from a year ago, the same as in March. On a monthly basis, it rose just 0.2%. Economists focus on core inflation because it gives a better view of long-term trends.

Some travel costs dropped in April, like airfares and hotel prices, possibly due to fewer international visitors. This also helped keep overall inflation down for now.

Companies Begin Raising Prices

Many companies have already raised prices or are planning to:

• Mattel, maker of Barbie and Hot Wheels, said it would raise prices on some toys.
• Stanley Black & Decker increased prices in April and plans more hikes later in the year.
• Procter & Gamble, which makes household products like Tide and Charmin, said it may pass higher costs on to shoppers starting in July.

These price increases are mostly due to the added costs from tariffs on imported materials and goods.

What’s Happening with the Tariffs?

Only some of the U.S. President’s tariffs were active in April, such as:

• 25% duties on steel and aluminum
• 25% on some goods from Canada and Mexico
• 20% on certain Chinese imports

A previously announced 145% tariff on Chinese goods was lowered to 30% after a new deal was made. Some of the higher tariffs are on hold for 90 days. This pause has encouraged businesses to resume imports, which could prevent shortages in stores.

Still, the added costs are expected to increase prices on many products. For example, children’s shoes from China now face nearly 100% tariffs due to overlapping import taxes.

Shipping Costs and Uncertainty

Matt Priest, president of the Footwear Distributors and Retailers of America, said that shipping costs are also rising as companies rush to bring in goods during the 90-day window of lower tariffs.

“We’re still dealing with rising inflation-related costs,” he said.

How Tariffs Could Affect You

The average tariff on goods entering the U.S. is now around 18% — six times higher than before Trump took office. That’s the highest in 90 years.

The Yale Budget Lab estimates that these tariffs will:

• Increase prices by about 1.7%
• Cost the average American household around $2,800 this year

Small Businesses Still Unsure About Future Costs

Some small businesses are still figuring out how the new tariffs will impact their operations. Rick Woldenberg, CEO of Learning Resources, said his company’s tariff bill would have jumped from $2.3 million to $100.2 million under the original 145% rate.

Now, with a lower 30% tariff, he’s cautiously resuming shipments but remains unsure how much to charge customers.

“We just don’t know what our costs are,” he said. “We do not know what our freight costs are.”

Bottom Line

While April brought a bit of relief from rising prices, economists warn that inflation will likely climb again as the effects of tariffs work their way through the economy. Families and businesses alike should prepare for higher prices in the months ahead — especially on goods imported from China and other countries facing U.S. tariffs.

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