Inflation Data Could Show Signs of Progress After Disappointing Run

This year began with three uncomfortably hot inflation readings in a row. Economists are hoping that fresh data on Wednesday will finally bring signs of a cool-down.

Forecasters expect the Labor Department report to show that the Consumer Price Index climbed 3.4 percent in April from a year earlier. That would mark a slight slowing from the 3.5 percent inflation rate in March.

Economists tend to focus on a separate measure of inflation that strips out volatile food and fuel prices to give a better sense of the underlying trend. They expect that “core” measure to show prices rose 3.6 percent from a year earlier, which would be the lowest annual reading since early 2021.

Wednesday’s data carries crucial implications for policymakers at the Federal Reserve, who are weighing when — and even whether — to cut interest rates.

Inflation fell rapidly last year, giving rise to hopes that the Fed was on the verge of succeeding in its effort to rein in price increases without causing a recession, and that the central bank could soon begin cutting interest rates. But progress has since stalled, and investors have all but given up hope of rate cuts before September.

An encouraging inflation report on Wednesday is unlikely to change that. But it could be a step toward giving policymakers confidence that inflation is returning to normal, which they have said they need before they begin cutting rates, which are currently set at about 5.3 percent.