After a series of too-hot-for-comfort inflation readings to start 2024, the April Consumer Price Index finally brought some relief.

Why it matters: In a sense, the best news is in what the report didn't say. The April cooldown helps reduce fears that inflation may be reaccelerating.

• But it is not definitive evidence that price pressures have resumed the downward trend seen in 2023, and Federal Reserve officials will want to see more evidence of disinflation before cutting interest rates.

What they're saying: "The first downside surprise in inflation since the turn of the year will be a relief to the niggling concerns that inflation was starting to trend upwards again," Seema Shah, chief global strategist at Principal Asset Management, wrote in a note.

By the numbers: In the 12 months through April, CPI rose 3.4%, a smaller gain than the 3.5% the prior month.

• Core CPI, which excludes energy and food costs, rose 3.6% compared to 3.8% in March.
• Over the last three months, core CPI rose at an annualized rate of 4.1%. That's down from 4.5% in March but still higher than that seen throughout the latter half of 2023 and far above the levels consistent with the Fed's 2% inflation target.

The intrigue: Housing is the wildcard that might keep inflation from returning to a more palatable level. It was the largest factor in core CPI's 0.3% monthly increase.

• Rent prices rose 0.4% for the third straight month — a still-rapid pace that does not reflect the disinflation trends seen in private sector data.
• Fed chair Jerome Powell told reporters earlier this month that he was confident housing disinflation would eventually show up in the government data, "but not so confident in the timing of it."

Other service sector price increases look sticky, too. Auto insurance costs, for instance, rose 1.8% alone last month. Hospital service costs, too, are still rising sharply.

Between the lines: The April data alone will likely not convince Federal Reserve officials that inflation is decisively falling in a way that makes them comfortable lowering interest rates this summer.

• But the numbers are finally moving in a direction that — if sustained — put September rate cuts squarely on the table.

The other release in today's data doubleheader also pointed to an economy gradually cooling down.

Driving the news: Retail sales were flat in April, the Census Bureau said, following a downwardly revised 0.6% gain in March.

• The core control group of retail sales that feeds directly into overall GDP calculations actually fell by 0.3%, contrary to analyst expectations of a small rise.

State of play: While the soft numbers were partly payback for a strong March that may have been exaggerated by the timing of Easter, taken together they point to consumer spending coming off of its high boil, which is what the Fed would like to see if it is to ease policy later this year.

• Some anecdata points in the same direction. Yesterday, Home Depot reported a 2.3% drop in sales last quarter, as it was "impacted by a delayed start to spring and continued softness in certain larger discretionary projects," CEO Ted Decker said.

The bottom line: "The weaker-than-expected retail sales report for April indicates that US consumers are acting with more prudence as labor market conditions soften and prices remain persistently high," wrote EY-Parthenon senior economist Lydia Boussour in a note.