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The Consumer Price Index (CPI) report for April is expected to show the first clear signs of inflation resulting from the tariffs imposed by President Donald Trump.

The report is scheduled to be released at 15:30 Riyadh time on Tuesday, less than 24 hours after markets surged following the announcement by the U.S. and China of a temporary halt to mutual tariffs for 90 days.

The Chief Economist at UBS, Jonathan Pingle, wrote in a client note on Monday: "We expect to see the first signs of tariff-related inflation in the Consumer Price Index report for April released on Tuesday."

Signs of accelerating inflation due to Trump's tariffs

Inflation is expected to have accelerated during the month in which Trump announced what he called "Liberation Day" by imposing tariffs that raised concerns among investors, businesses, and consumers about rising commodity prices. Just a week later, Trump announced a temporary halt to those tariffs for 90 days on all countries except China, while maintaining a core tariff rate of 10% on everyone.

In the Consumer Price Index report, the annual inflation rate is expected to be 2.4% in April, representing stability compared to March. On a monthly basis, prices are expected to rise by 0.3%, compared to a decrease of 0.1% in March.

As for the "core" Consumer Price Index — which excludes the most volatile food and energy items — it is expected to record a year-on-year increase of 2.8%, the same rate recorded in March when core inflation hit its lowest level in four years. On a monthly basis, core prices are expected to rise by 0.3%, compared to 0.1% in March.

The full impact of the tariffs has not yet appeared

Although the upcoming report on Tuesday may show some inflationary effects of the new trade policies, economists believe the full impact of these policies will not become clear for several months.

Stephen Juno, Chief U.S. Economist at Bank of America, told Yahoo Finance: "This may be the first month we see some signals of the impact of tariffs, but it won't be widespread; it will be more confined to the automotive sector."

Juno added that the recent delay in tariffs with China may limit some potential increases in inflation over the coming months, but he still expects the upward trend to continue.

He said: "There is a lower risk of recession, and perhaps a lower risk of a significant rise in inflation, but inflation is still on an upward trend."

In a press conference held on May 7, Federal Reserve Chairman Jerome Powell emphasized that the central bank prefers to wait to see the effect of tariffs in economic data before changing its monetary policy path.

Powell said: "The risks of rising unemployment and inflation have increased, but they have not yet materialized. They have not actually appeared in the data so far... Our monetary policy is in a good place right now, and it is better to wait for more clarity."

Markets may ignore the report thanks to the tariff truce

Since Tuesday's report will not include data reflecting the effects of the temporary tariff freeze with China, some market strategists do not believe the report will negatively affect the recent rally in the stock market. Stuart Kaiser, Head of U.S. Equity Trading Strategy at Citi, wrote in a client note on Monday that the recent tariff truce may give upcoming economic data a "free pass" in the eyes of investors.

And added Kaiser: "If the Consumer Price Index data comes in higher than expected on Tuesday, or if there is weakness in employment data next month, these developments will be considered temporary as long as trade negotiations continue on their positive path."