**Inflation Rate Dips Slightly in April Amidst Trump Tariff Uncertainties**

Inflation showed signs of easing in April as the U.S. consumer price index (CPI) rose by a modest 0.2%, according to a report from the Labor Department. This latest increase puts the 12-month inflation rate at 2.3%, its lowest level since February 2021.

The report, released on Tuesday, highlighted that the rise in inflation was slightly lower than market expectations. The Dow Jones consensus had predicted the 12-month CPI to come in at 2.4%. Excluding the more volatile food and energy sectors, the core CPI also saw a month-on-month increase of 0.2%, bringing its year-over-year level to 2.8%. These numbers were in line with forecasts.

Several specific categories showed notable price changes. Shelter costs, which account for about one-third of the index weighting, increased by 0.3% in April and were a significant driver of the overall inflation figure. Energy prices, which had declined by 2.4% in March, rebounded with a 0.7% rise. On the other hand, food prices experienced a slight decline of 0.1%.

In the retail sector, used vehicle prices decreased for the second consecutive month, dropping by 0.5%, while new vehicle prices remained flat. Apparel costs saw a decrease of 0.2%, though medical care services and health insurance rose by 0.5% and 0.4%, respectively. Motor vehicle insurance also increased by 0.6%.

A dramatic drop was observed in egg prices, which fell by 12.7% in April. However, it's important to note that egg prices were still a significant 49.3% higher compared to the previous year.

The Trump administration's tariffs continue to cast uncertainty on the inflation outlook. Although President Donald Trump has indicated a willingness to negotiate, the fluctuating tariff policies could impact future inflation readings. Recently, Trump announced a temporary 90-day halt on aggressive tariffs against China to facilitate further negotiations.

Market reactions to the April CPI report were muted, with stock futures showing slight declines and Treasury yields mixed. Investors are now less certain about the likelihood of the Federal Reserve implementing interest rate cuts this year, especially in light of Trump's softened tariff stance and the consistent inflation rate above the Fed's 2% target over the past four years.

The Bureau of Labor Statistics is set to release the April producer price index on Thursday, which is closely watched as a leading indicator of inflation.