April U.S. CPI Hotter Than Expected, Crypto Volatile

The U.S. Consumer Price Index for April, released by the Bureau of Labor Statistics on May 12, rose 3.8% year over year. Core CPI, which excludes food and energy, increased 2.8% year over year. On a monthly basis, headline CPI rose 0.6% and core CPI rose 0.4%. Economists had forecast 3.7% year-over-year for headline CPI and 2.7% for core CPI, with core month-over-month expected at 0.3%.

Higher gasoline prices contributed to the rise in the headline reading. Core inflation’s increase reflects continued pressure from housing services, where shelter costs remain elevated.

Before the report, markets priced a strong likelihood that the Federal Reserve would hold rates at its June meeting, with futures implying about a 97.6% probability. The hotter-than-expected CPI reduced the odds of near-term rate cuts and prompted rapid repositioning in bond and currency markets.

Treasury yields moved sharply after the release and the dollar strengthened against several currencies. Cryptocurrencies and U.S. equity sectors linked to growth expectations experienced increased volatility; Bitcoin showed large intraday swings.

Several major banks had warned that rising energy costs and persistent shelter expenses could push April readings higher. Investors will watch upcoming Producer Price Index readings, Federal Reserve commentary and further moves in the bond market for signs about the timing of policy easing. Crypto traders will monitor whether Bitcoin holds technical support around $80,000.