Inflation Cools as Core Prices Post Smallest Increase Since 2021 By Vicky Ge Huang

U.S. inflation moderated slightly in April, with a key measure of price pressures slowing to its lowest level since spring 2021. Meanwhile, a Boston College study shows that retirees are being forced to tap their savings. And the Treasury Department tries to tighten regulation that seeks to prevent the U.S. financial system from being used for money laundering.

Read on for this news and more.

Top News Inflation Eases as Core Index Hits Lowest Level Since 2021

U.S. inflation eased slightly in April, with a key measure of price pressures slowing to its lowest level since spring 2021.

The consumer-price index , a gauge for goods and service costs across the U.S. economy, rose 3.4% in April from a year ago, the Labor Department said Wednesday. So-called core prices that exclude volatile food and energy items climbed 3.6% annually, the lowest increase since April 2021. Both figures were in line with economists' expectations.

U.S. Economy Retirees Dip Into Savings to Cope With Inflation

Retirees took more money out of their savings to keep up with rising prices, raising the risk of depleting their nest eggs.

The rise in spending since 2021 shows how pernicious inflation can be for those in or near retirement, especially since higher prices can also erode the value of the cash and fixed-income investments many plan to live on in the near future, according to a study Boston College released Wednesday.

Financial Regulation Investment Advisers Face Customer Vetting Requirements in Anti-Money-Laundering Push

U.S. regulators took another step toward bolstering anti-money-laundering safeguards with a proposal to require that certain investment advisers verify identities of their customers.

Forward Guidance Thursday (all times ET)

8:30 a.m.: U.S. housing starts for April

9:15 a.m.: Fed reports U.S. industrial production for April

3:50 p.m.: Atlanta Fed's Bostic speaks on economic outlook in Jacksonville, Fla.

Research U.S. High Yield Bond Market Shrinks

The outstanding U.S. high-yield bonds have declined in recent months due to defaults as well as upgrades to the investment-grade category, CreditSights analysts say in a note. "Defaults have removed $42 billion of face value from the [HY] index, another $102 billion has moved back to IG [sector] in the form of rising star upgrades." Over the past 16 months, upgrades to the IG sector have significantly outpaced downgrades, the analysts say. The outlook for the HY sector is a "stable-to-shrinking asset class" although the risk of increased downgrades to the HY category over the next 12 months is rising, CreditSights says. - Miriam Mukuru

Basis Points April's consumer price index report shows signs of easing inflation and thankfully isn't the nasty surprise that March's report turned out to be, Bankrate analyst Mark Hamrick says in a note. By contrast, the latest report has a familiar sound to it, with gasoline and shelter costs being the major contributors to the 3.4% year-over-year growth clocked in April, the analyst says. Still, inflation remains irritatingly high and requires that interest rates remain elevated in the near term, he says. On the flip side, that means the opportunity to save with higher yields will also stick around for some time, Hamrick says. - Dean Seal North American freight-railroad traffic rose 2.3% for the week ended Saturday, with strong intermodal performance again carrying the load. Carloads fall 2.6% on 12 reporting U.S., Canadian and Mexican railroads amid a nearly 22% drop in coal shipments, while the volume of intermodal units rises 7.4%, data from the Association of American Railroads show. North American rail traffic is up 2.1% for the first 19 weeks of the year, AAR said. - Colin Kellaher The Japanese economy contracted in the first quarter of 2024 , extending a rough patch and signaling that inflation fueled by a weak yen is hurting consumer demand. The economy's overall performance contrasts with robust earnings reported recently by top Japanese exporters such as Toyota Motor and the stock market's rise over the past year. The fall in the yen, which recently traded at a 34-year low against the dollar, helps exporters' competitiveness and tends to lift their profits. - Megumi Fujikawa The eurozone's financial system faces less acute threats to stability as it appears increasingly unlikely that the currency area's economy will slide into a deep recession , the European Central Bank said. However, the central bank warned that geopolitical and policy uncertainty remains "elevated" and that the potential for economic or financial shocks remains "high." - Paul Hannon The Philippine central bank held its policy rate steady as it continues to guard against inflation risks, but the meeting has stirred speculation that its hawkish stance is softening. - Kosaku Narioka and

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WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to[].

This article is a text version of a Wall Street Journal newsletter published earlier today.

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05-16-24 0716ET