Economic observers’ eyes remain on the rate of inflation, as the latest Consumer Price Index (CPI) from the Bureau of Labor Statistics shows mixed changes.
The CPI, one of the main measures of inflation, rose monthly at a seasonally adjusted basis of 0.2% during April. This is slightly higher than the 0.1% that the CPI rose during March 2025. However, measured annually before seasonal adjustment, the all-items index rose by only 2.3%, compared to the annual increase during March (2.4%).
The April 2.3% inflation rate is the lowest result for inflation since February 2021, as noted by Realtor.com® Senior Economist Jake Krimmel in a press release reacting to the CPI results. The 2.3% annual rate brings the Federal Reserve slightly closer to its self-mandated goal of reaching 2% inflation.
Compare the Personal Consumption Expenditures (PCE) Index, another inflation gauge, which saw a drop in annual inflation from 2.5% to 2.3% in April.
The CPI’s measure of core inflation—which does not account for food and energy costs—rose 0.2% month-over-month in April, but remained flat annually at 2.8%. A significant driver of core inflation is shelter costs, per Krimmel; the CPI index for shelter rose 0.3% in April and accounted for about half of the all items index’s monthly increase.
At its most recent meeting on Monday, May 7, 2025, the Federal Reserve left current interest rates unchanged, not slashing or raising them. Fed Chair Jerome Powell indicated a cautious posture among him and his colleagues due to overall economic uncertainty, stemming in part from concerns about the administration’s shifting implementation of tariffs.
National Association of REALTORS® (NAR) Chief Economist Lawrence Yun on the other hand, said in a statement that the data brings the Fed “one step closer” to a rate cut, and did not mention tariffs as a factor.
“Fed rate cuts with high inflation will not result in lower mortgage rates. However, rate cuts because of falling inflation will mean meaningfully lower mortgage rates,” he said.
Yun added that the “jumbo heavyweight” element of the CPI is housing costs, which were up 4%.
“Getting shelter costs under control with more housing supply (and not via disastrous rent control) will be the key to getting overall inflation fully tamed and for the Federal Reserve to ‘normalize,’ which in my view means four to six additional rate cuts,” he said.
Krimmel, though, echoed the Fed’s concerns, writing that “despite a modest improvement in inflation, economic uncertainty remains high.” Tariffs have sparked increased concern along both sides of the Fed’s dual mandate: maximum employment and low inflation. Krimmel added that this positive move on inflation is also unlikely to significantly boost the housing market in the near future.
“With the spring housing season underway, both buyers and sellers are facing a market where optimism over lower levels of inflation is tempered by elevated borrowing costs and economic uncertainty,” wrote Krimmel, who contrasted the increase with housing inventory and listings with a simultaneous fall in pending sales.
Pending home sales increased in March, per data from NAR, but in a separate study, Realtor.com also found that pending sales dipped in April.
Krimmel attributed much of ongoing buyer reticence to high mortgage rates, and the Fed’s cautious posture means that mortgage rates are unlikely to receive the downward pressure of an interest rate cut soon.
“Until borrowing costs fall meaningfully, housing activity is likely to remain subdued, even as underlying demand and supply slowly improve,” he said.
For the full CPI, click here.
