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U.S. inflation cooled last month to its lowest rate in four years. Prices, as measured by the Consumer Price Index for All Urban Consumers (CPI-U), rose 2.3 percent nationwide between April ’24 and April ‘25. This represents a slight drop from the 2.4 percent annual increase recorded in March, and the lowest rate since February ‘21. Metro Houston’s annual inflation rate in April was lower than the national rate at 1.2 percent.

U.S. inflation, at 2.3 percent, came in lower than the 2.4 percent expected by economists in a recent FactSet survey. While tariffs may increase inflation in the months ahead, businesses have been slow to pass on costs to consumers due to uncertainty about where tariff rates will ultimately land and whether certain sectors may be exempted. The Federal Reserve is likely to hold interest rates steady in June and wait and see how tariffs affect prices when setting rates later in the year.

Metro Houston’s lower inflation was largely due to differences in housing-related costs, which rose 4.0 percent nationwide year-over-year compared to only 2.3 percent in Houston. The metro area also saw apparel and transportation prices fall faster than in the U.S. overall, while the cost of medical care grew more quickly (3.4 percent in Houston vs. 2.7 percent nationwide).

In Houston, alcoholic beverages, home furnishings, food away from home (i.e. restaurants), and medical care saw price increases of three percent or more. Food at home (i.e. groceries), shelter, new and used vehicles, and education services saw increases of less than three percent. Gasoline, apparel, and recreation saw prices fall.

The next release of CPI data will be on Wednesday, June 11, 2025.

Prepared by Greater Houston Partnership Research.

Colin Baker
Manager of Economic Research
bakerc@houston.org

Clara Richardson
Analyst, Research
crichardson@houston.org