Annual consumer inflation rose 4.9 percent last month, just a touch lower from 5.0 percent in March, official figures showed, despite strong efforts to rein in price increases.
While the latest number is a step in the right direction and marks the smallest annual rise in around two years, it remains well above pre-pandemic levels.
"Holding relatively firm at 4.9 percent, inflation is persisting despite the Fed's long-running campaign of rate hikes," said Srijan Katyal, global head of strategy and trading services at brokerage ADSS.
Following last week's Fed hike to interest rates and a forecast-beating jobs report for the world's biggest economy, cautious investors were waiting for the key U.S. data for insights into the direction of U.S. policymakers.
Inflation data is likely to play a key decision-making role in the U.S. central bank's June policy meeting, according to market watchers.
"The sharp rise in the cost of borrowing has had a brutal impact on consumers and businesses and any relief on this front would be welcomed by the market - even if it is just a rates pause rather than reduction in the near-term," said Russ Mould, investment director at AJ Bell.
The Fed has hinted at a possible pause in its long-running tightening cycle but observers warned that any sign inflation is creeping up would put pressure on officials to turn the screws further.
While the U.S. economy shows resilience, several indicators suggest it is easing, feeding concerns that it could be heading for a recession.
"The central bank has made it perfectly clear that returning inflation to target over the medium term remains the primary goal whatever the cost but we've now likely entered the uncomfortable period in which things are breaking, credit conditions are tightening considerably but the data isn't quite there yet," said Craig Erlam, senior market analyst at OANDA.
US April Consumer Inflation Eased Slightly
WASHINGTON - Much-anticipated data released May 10 showed U.S. consumer inflation had eased only slightly in April.
