Inflation in the United States was just a touch softer than expected in April, providing policymakers with a momentary sigh of relief and a not-so-subtle reminder that even in a trade war, consumers can be spared… for now.

The Consumer Price Index, stripped of its usual troublemakers — food and energy — rose a modest 0.2% from March, according to Bureau of Labour Statistics data. That’s the third month of underwhelming inflation, a streak of restraint that would almost be commendable were it not partially fuelled by a curious phenomenon: businesses swallowing the cost of tariffs rather than passing them on to their customers. Martyrs of the retail world, one might say.

Prices of tariff-exposed categories like new cars and clothing failed to surge as feared, suggesting that many importers still sell goods that slipped through customs before the Trump administration’s tariff sledgehammer came down. Either that, or retailers are desperately clinging to their price tags, hoping to survive another month.

Meanwhile, service sectors like travel and leisure—dependable barometers of consumer optimism—are beginning to wobble. It seems Americans are tightening their belts… or simply not buying new ones.

A hastily arranged weekend trade truce with China helped soothe nerves and dial back recession forecasts, but let’s not get too comfortable. The 90-day pause lowered combined US tariffs on Chinese goods to a still eye-watering 30%, offering some breathing room — or a brief delay before the next round of economic indigestion.

While the Trump administration claims tariffs will magically reshore industry and jump-start domestic investment, many economists argue they’re doing precisely the opposite: fuelling uncertainty, pinching supply chains, and encouraging retailers to panic-stock microwaves and sock drawers before the next policy U-turn.

Housing — the ever-lurking behemoth in the inflation basket — is still grinding upward. Shelter costs rose 0.3%, driven by rising rents. Service prices outside of housing and energy nudged up only 0.2%, and year-over-year gains slowed to 2.7%, the weakest in four years. The Fed’s preferred inflation gauge, the PCE index, might eventually reflect this moderation — assuming tariffs don’t barge in first.

Elsewhere in the data, grocery prices saw their sharpest drop since 2020, except eggs, which staged a nostalgic comeback worthy of 1984. Meanwhile, prices for imported furniture and appliances surged, because who doesn’t love paying more for a washing machine wrapped in economic nationalism?

With real average hourly earnings up 1.4% from a year ago — matching the highest since October — consumers may surprise us all by continuing to spend, just perhaps a little less exuberantly. The Fed will be watching closely, torn between the need to curb inflation and the political theatre of not looking like it’s doing Trump’s bidding.

Inflation isn’t dead; it’s just hiding behind the tariff fog. The Fed stays seated, Trump keeps tweeting, and consumers wonder whether to buy now or brace for impact. Welcome to economic policymaking in 2025 — part central banking, part hostage negotiation.