Inflation is expected to slow, but barely in the Consumer Price Index report to be released on Wednesday at 8:30 am. Here are five things to keep an eye out for:

April showers bring… more headaches for the Fed?

Economists forecast inflation to rise 0.4 percent on a monthly basis compared to March's 0.1 percent, the lowest in nearly two years. On a yearly basis, it’s expected to remain flat at 5 percent.

These numbers combined with a strong jobs report that surpassed expectations, could cause the Federal Reserve to increase rates at least one more time. It has raised rates 10 times since March 2022, the latest just a week ago.

Its current forecast says no more hikes are expected, although it could change when they meet next month. At the current pace, the country could end up with 4 percent inflation by the end of the year, which is far below the 9.1 peak last June, but still double than the desired outcome.

The question that remains is whether this will be enough to bring it down to the ideal 2 percent.

“The discussion is whether they’re done after the last hike,” Oscar Munoz, Vice President and Macro Strategist at TD Securities, said.

Another worrisome aspect it’s a high core CPI, the measure of inflation that excludes food and energy due to its volatility. It increased last month by 0.4 percent monthly and 5.6 percent on a yearly basis.

Vehicles on a bumpy road

The return to normalcy after the Coronavirus pandemic was supposed to bring car prices back down consistently. As you might have noticed when searching for that new or used car, this is far from over.

Prices for new cars are expected to increase for a variety of reasons. The microchip shortage that first stalled car production, it then created a surplus once the manufacturers reopened and supply chains recovered. High prices and high borrowing costs dropped demand for cars, but apparently it didn’t go down enough. Some automakers have not been able to keep up with the demand because they can’t access the chips they need.

But prices will go down eventually.

Used cars in contrast have dipped in value by 11.2 percent over the last year, but they remain 32 percent higher than its pre pandemic levels according to data by the Bureau of Labor Statistics.

Have a fancy date? Think again and help the Fed

The expectations for restaurants forecast another increase for the month of April. Last month, this category outpaced grocery prices for the first time since mid 2021.

This is particularly bad news for the Fed and its fight against inflation because wages also drive costs at restaurants. In the last Jobs report released last week, wages increased 0.16 cents on average.

The National Restaurant Association attributes part of this growth to the expiration of the federal widespread free school lunch program enacted during the pandemic.

Grocery prices will continue to rise but at a slower pace. Across the main food categories like meats, poultry, fish, fruits and vegetables, and even eggs, decreased considerably for the past month.

But the overall state for groceries shows that prices are still very high.

The rent mirage

The largest contributor to the CPI is rent prices, which accounts for 30 percent of the total weight. It increased 0.6 percent last month and It’s expected to continue this course and gradually cool. But it doesn’t reflect what’s happening.

Data for this category takes time to account for changes in inflation, so what we’re seeing is probably numbers from six months ago or more.

In fact, rent prices are 5.63 percent lower than its peak in August 2022 according to a report by

Some reports use a different category within the CPI called the Super Core CPI. This subgroup excludes housing costs to have a more precise view of inflation.

When the river sounds, it carries water

The most hopeful sign for inflation might be outside the report itself. There are other factors that, combined with interest hikes, would help the Fed to tame inflation and that’s the banking crisis. The most recent victim: First Republic Bank.

Regional medium banks, an essential source of capital for businesses, have failed and others are in trouble. The ramifications of the collapse of medium regional banks like Silicon Valley Bank and Signature Bank include the tightening of credit. This would reduce the investment for businesses that depend on them. But this will take time to happen.

Commercial loans have fluctuated during 2023. Commercial industrial loans shrunk by 5.5 percent in February but have bounced back. Commercial Real estate loans have remained strong until up to the month of march.

“Banks [failures] might have increased the demand for loans,” Michael R. Englund, Principal Director and Chief Economist at Action Economics LLC, said.

With over a month left before the Fed’s next month, and one more CPI, Jobs and Personal Consumption Index (PCI), their favorite tool to measure inflation, there will be plenty of time and data to decide whether Americans need to brace for more hikes.