The U.S. Consumer Price Index was 0.3% higher in April than in March. That’s the smallest monthly increase since January 2021—and barely faster than the January 1995-February 2020 average. Taken at face value, the latest data are a welcome respite from the excessive inflation that began last spring.

But this apparent good news is deceiving. For one thing, monthly CPI inflation would have been 0.6% in April had it not been for the sharp drop in gasoline prices that has already reversed.1 Worse, inflation in the subcategories that have been least affected by idiosyncratic forces attributable to the pandemic or to the Russian invasion of Ukraine—and are therefore the most representative of underlying U.S. inflationary pressures—are showing few signs of improvement.

Still, there are a few encouraging signs in the data.

Most notably, we may be past the worst of the excess inflation in manufactured goods. If that holds, it should help push down the overall inflation rate despite the worsening inflation numbers under the hood. (Much depends on how the Russian invasion of Ukraine and the Chinese government’s ongoing struggles with the pandemic play out.)

Moreover, there are some indications that inflation may have peaked in the categories most sensitive to underlying domestic conditions. Finally, market-based and survey-based measures both imply that Americans still believe the current disruption is basically temporary, which should discourage consumers and businesses from engaging in self-reinforcing inflation-hedging behavior.

First, the Good News: Manufacturing Is Healing

The Overshoot

U.S. Inflation is Getting Worse (and Better?)

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