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    Inflation Slows as High Interest Rates Take Effect

    Inflation slowed for a 10th straight month in April, a closely watched report on Wednesday showed, good news for American families struggling under the burden of higher costs and for policymakers in Washington as they try to wrangle rapid price increases.

    The Consumer Price Index climbed 4.9 percent in April from a year earlier, less than the 5 percent economists in a Bloomberg survey had expected. Inflation has come down notably from a peak just above 9 percent last summer, though it has remained far higher than the 2 percent annual gains that were normal before the pandemic.

    After stripping out food and fuel to get a sense of the underlying trend in price increases — what economists call a core measure — consumer prices climbed 5.5 percent from a year earlier, a slight drop from 5.6 percent in the previous reading.

    The slowdown in price increases last month came even as gas costs picked up and rent costs continued to climb briskly. New car prices, a measure of the price of medical care and airfares all declined in April, the report showed.

    Although inflation has been gradually cooling, it has remained too elevated for policymakers to be comfortable. Much of the slowing in price increases has come as supply chain bottlenecks have cleared up, goods shortages have eased and gas prices have moderated after a surge in summer 2022 that was tied to Russia’s invasion of Ukraine. But underlying trends that could keep inflation persistently high over time have remained intact, including unusually strong wage growth, which could prod companies to try to charge more for products and services.

    Yet policymakers also received good news along those lines in Wednesday’s report. The data showed a meaningful slowdown in services prices after stripping out food, energy and housing costs. That measure climbed by 5.2 percent on a yearly basis, down sharply from 5.7 percent in the previous reading.

    Policymakers have been watching that trimmed-down measure for a signal of where price increases might go next.

    Stock prices jumped after the data was released, a sign that investors interpreted the data as good news for Federal Reserve policymakers.

    Fed officials are likely to watch the April inflation report closely. Officials have raised interest rates over the past year at the fastest pace since the 1980s to slow lending and weigh down the economy, but now that rates are above 5 percent, policymakers have signaled that they could pause rate moves as soon as their mid-June meeting. That decision will hinge on incoming economic and financial data, they have said.

    Policymakers will receive the consumer price report for May on June 13, the day before their decision, but officials typically give markets at least a hint of what they might do with rates ahead of time. That puts significant attention on the April report.

    John C. Williams, the president of the Federal Reserve Bank of New York, told reporters in New York on Tuesday that the Fed’s next decision — on whether to raise rates or pause at the June meeting — would hinge on incoming data.

    He said that it had been appropriate for the Fed to raise interest rates through May to try to get them to a restrictive stance, and that now “we’ll adjust policy going forward based on what we see out there.”

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