Key Takeaways:The April CPI report is expected to show continued high inflation due to the spike in energy prices.Economists will be watching for any signs of inflation spreading into the broader economy.An update on housing costs could additionally lift the April inflation reading.

The April Consumer Price Index is forecast to show another month of high inflation, driven largely by the oil-price spike caused by the Iran war.

Forecasts call for the CPI to rise 0.59% in April from a month earlier and 3.7% on an annual basis, according to FactSet. That would follow a 0.9% increase in March as well as a 3.3% annual rate of inflation.

Economists expect core inflation, which excludes volatile food and energy prices, to show an increase of 0.30% for the month and 2.7% year over year. Those readings would be up slightly from the March report.

The impact of President Donald Trump’s tariffs is finally beginning to lessen, economists say. However, an update in the data on housing costs is expected to add to April’s inflation reading. Plus, rising energy costs have continued to place upward pressure on prices.

The critical issue will be the degree to which energy-price inflation remains contained to areas with a direct impact such as gas prices or tight second-order effects as in the case of airfares.

“The major question is how quickly the energy shock is going to bleed through to core consumer prices,” says Natixis chief economist Christopher Hodge.

Against this backdrop, the CPI report is not expected to lead to any near-term changes in interest rates by the Federal Reserve. Fed officials have indicated they will be looking for clarity on the impact that higher energy costs will have on inflation.

April CPI Report HighlightsCPI report release date and time: Wednesday, May 12, at 8:30 a.m. EDTThe CPI is forecast to rise 0.59% in April after rising 0.90% in March.Core CPI is forecast to rise 0.30% in April after rising 0.20% in March.The CPI year over year is forecast to rise 3.7% in April after increasing 3.3% in March.Core CPI year over year is forecast to rise 2.7% in April after increasing 2.6% in March.Economists Expect Flat Core Goods Inflation and Firmer Core Services Inflation

For many consumers, the biggest current pain point for inflation is the price of gas. Economists expect rising gas prices to be a major driver of the overall rate of inflation. At UBS, economist Alan Detmeister expects gas prices to show a 6% rise for the month, which in turn would help take the overall CPI to a 0.59% rise for the month. Core inflation should rise 0.37%, he predicts.

Core inflation is expected to be lifted by a technical adjustment in data for housing costs. Back in October, because of the government shutdown, a semiannual reading on an item known as owners’ equivalent rent was recorded as zero change. That data is due to be updated with the April report.

Data to Show Rising Housing Costs

“Last year’s government shutdown resulted in the BLS being unable to collect CPI data for October,” economists at Bank of America write. “That led the BLS to use carry-forward imputation for rent and [owners’ equivalent rent]. Since rent and OER panels are conducted every six months, the April rent data will be compared against last April instead of last October. That should result in a much firmer read on rent and OER this month and lead to some normalization in the year-over-year rate for core.” Bank of America forecasts a 0.51% overall increase in the CPI with a 3.7% year-over-year increase. Core inflation, however, could rise 0.29% for April and 2.7% year over year, according to Bank of America forecasts.

At the same time, economists are looking for some relief from the upward pressure on inflation from Trump’s tariffs. “Tariffs are reaching their peak impact on 12-month inflation, but that inflation will stay well above what it would have been without the tariffs for some time,” Detmeister writes.

Goods Inflation to Remain Soft

Vanguard analysts expect core goods inflation to remain muted at 0.09% month over month and core services inflation to increase 0.41% month over month because of the one-off acceleration in rents as well as a rebound in medical-care services and higher airfares. “We expect spillovers from higher energy prices to remain largely confined to transportation services in April’s core CPI. However, price-related survey measures that typically lead core CPI by roughly three months point to rising upside risks, particularly if energy prices remain elevated,” they write.

Natixis’ Hodge forecasts core year-over-year inflation will remain within 2.6 and 2.9% over the remainder of the year—uncomfortably high, but not reaccelerating—as higher energy prices begin to weigh on consumer confidence and discretionary spending. “We’re not seeing the tariff pressures, the energy pressures bleed through into that domestically generated inflation component,” he says. “Each inflation print is going to be increasingly important to get a clearer picture about what this energy shock is doing to underlying prices.”