According to forecasts, the Consumer Price Index (CPI) is expected to have risen by 3.4% over the year in April, slightly down from a 3.5% annual increase in March. These figures indicate that inflation has remained stubbornly above the Federal Reserve's target of a 2% annual rate in the first half of this year, despite efforts to lower it through high interest rates.

The Federal Reserve officials have made it clear that they will not consider cutting the influential fed funds rate, which affects borrowing costs for various loans, until inflation shows a definite downward trend towards 2%. Therefore, if the early forecasts hold true, it suggests that inflation likely stayed higher than the Federal Reserve officials would prefer in April.

A consensus estimate by forecasters tracked by Bloomberg, cited by Wells Fargo Securities, predicts a rise of 3.4% in the cost of living as measured by the CPI in April. Additionally, the Federal Reserve Bank of Cleveland's "nowcast," which projects the CPI based on incoming economic data, also supports a 3.5% annual increase. These figures are well above the Federal Reserve's desired 2% annual inflation rate.

Interestingly, the rise in prices has outpaced expectations during the first three months of the year, indicating a stall in the progress made against inflation, which had significantly decreased last year. High inflation has impacted household budgets, not only due to higher prices for everyday items like gas and groceries but also because it has forced the Federal Reserve to delay cutting its benchmark interest rate. As a result, interest rates on mortgages and credit cards have remained higher.

The Federal Reserve officials have been waiting for clear signs that inflation is on a firm downward trajectory before considering a cut to the fed funds rate, which has been at a 23-year high since July last year. If inflation remains in line with forecasts, it is highly unlikely that the rate will be cut before December, according to economists at Bank of America.

One factor contributing to the stubbornly high inflation is the rise in gasoline prices in April. However, there are some encouraging details within the report. "Core" inflation, which excludes volatile food and energy prices, likely rose by 0.3% over the month, down from 0.4% in March, according to the consensus estimate. This is an important indicator for economists monitoring overall inflation trends.

There is also reason for optimism in the used car market. Wholesale prices in this sector fell by 2.3% in April, resulting in a 14% year-over-year decline, according to data provider Mannheim. Since used car prices contribute significantly to the overall inflation level, this development is noteworthy. However, economists at BMO Capital Markets caution that changes in wholesale used car prices may take a few months to impact inflation data, suggesting that April's figures may not fully reflect this dip in prices.

Overall, the Consumer Price Index is expected to have risen by 3.4% in April, indicating stubbornly high inflation that has remained above the Federal Reserve's desired target. While there are some positive signs in the report, particularly in the core inflation rate and the used car market, it remains to be seen how long it will take for inflation to show a more sustained downward trajectory, prompting potential rate cuts by the Federal Reserve.