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STORY: U.S. consumer prices rose less than expected in April, suggesting that inflation resumed its downward trend at the start of the second quarter.

And the report from the Labor Department Wednesday lifted Wall Street's expectations for a September interest rate cut.

Those expectations were further bolstered by other data on Wednesday showing retail sales were unexpectedly flat last month as inflation-weary consumers cut back spending at online retailers and auto dealerships.

The consumer price index rose 0.3% last month after advancing 0.4% in March and February.

Higher housing costs and gasoline prices were behind most of the gain.

Food prices overall were unchanged. Prices at the supermarket declined 0.2%, with eggs, meat, poultry and fish cheaper, as were fruits and vegetables.

In the 12 months through April, the CPI increased 3.4% after climbing 3.5% in March.

While prices excluding volatile food and energy costs climbed 3.6%, which was the smallest year-on-year gain since April 2021.

Economists expect inflation pressures to ebb this quarter and prices to gradually move toward the Fed's 2% target as the labor market is cooling.

Financial markets saw a roughly 73% probably of a rate cut in September, up from 69% before the data.

Stocks rose in morning trading.