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Led by lower food and auto prices, inflation in the United States cooled slightly last month after three elevated readings, likely offering a tentative sigh of relief for officials at the Federal Reserve and some borrowers.

Consumer prices rose 0.3 percent from March to April, the Labor Department said Wednesday, down slightly from 0.4 percent the previous month. Measured year-over-year, inflation ticked down from 3.5 percent to 3.4 percent. And a gauge of underlying inflation, which excludes volatile food and energy costs, reached its lowest level in three years.

A separate report on retail sales, also released Wednesday, showed that Americans’ spending at stores and restaurants was unchanged in April after a healthy gain in March. A more restrained consumer could reassure the Fed that inflation will keep cooling.

Wednesday’s inflation data “keeps alive the prospect of the Fed cutting rates in September,” said Kathy Bostjancic, chief economist at Nationwide Financial. “The weak retail sales data also lends support to that.”

Inflation had been unexpectedly high in the first three months of this year after having steadily dropped in the second half of 2023. The elevated readings had dimmed hopes that the worst bout of inflation in four decades was being rapidly tamed.

Wednesday’s report provides a dose of reassurance that the pace of price increases may be resuming its slowdown. While the latest figures show inflation still well above the Fed’s 2 percent target, it’s the first time this year that the year-over-year figure has declined. And price increases cooled in some service industries, such as hotels, health care and auto repairs, that had previously kept inflation elevated.

The report “was a tiny step in the right direction,” said Danielle Hale, chief economist at “The fight against inflation is not yet over, but the worsening trend observed in the first quarter of 2024 may have ended.”

Fed Chair Jerome Powell had responded to the high inflation readings earlier this year by dropping his previous suggestions that interest rate cuts were likely in 2024. Instead, he stressed that the Fed’s policymakers need “greater confidence” that inflation is falling to their 2 percent target before they would reduce borrowing rates from high levels.

In a trend that has been frustrating for the inflation fighters at the Fed, apartment rental prices remained stubbornly high in April, climbing 0.4 percent from March. Average apartment rents are 5.4 percent higher than they were a year earlier. Rental and other housing costs accounted for two-thirds of the year-over-year increase in core prices.

Rents soared during the pandemic as more Americans chose to live alone or sought more living space. Though rents for new leases are rising much more slowly, consistent with pre-pandemic patterns, the earlier increases are still elevating the government’s price data.

Powell, in remarks in Amsterdam on Tuesday, called rents “a bit of a puzzle” because measures of new apartment leases show new rents barely increasing. Such weaker data has apparently yet to flow into the government’s measures, which cover all rents, including for tenants who renew their leases and are facing bigger increases. Powell said the government’s measures should eventually show rent growth easing.

Powell also reiterated that he still expects inflation to ultimately reach the central bank’s 2 percent target. But he acknowledged that his confidence in that forecast had weakened after three straight months of elevated price readings. Inflation has fallen sharply from 9.1 percent in the summer of 2022 but is higher now than in June 2023, when it first touched 3 percent.

With 11 rate hikes from March 2022 to July 2023, the Fed’s policymakers raised their key rate to a two-decade high of 5.3 percent in an effort to quell rising prices. Powell underscored Tuesday that the Fed will keep its rate at that level for as long as needed to fully conquer inflation, a signal that rate cuts won’t begin as soon as many people had hoped.

Associated Press staff writer Josh Boak contributed to this report.