(Bloomberg) -- Key drivers of underlying US price pressures began receding in April, suggesting the final puzzle pieces for a return to more-normal inflation rates are falling into place.

Rent increases were smaller than over the last year on average, and services prices excluding housing and energy — a category the Federal Reserve is watching closely — posted the smallest advance since last summer, according to a Bureau of Labor Statistics report Wednesday.

Housing and services inflation has remained stubbornly elevated amid strong income trends and an ongoing tailwind from the economy’s reopening that has seen Americans eager to travel and dine out. Moderation could bolster the case for the Fed to pause its interest-rate increases soon.

“Most categories — and in particular, demand-sensitive categories — show disinflationary pressures,” said Gregory Daco, the chief economist at EY-Parthenon. “Whether you look at some of the goods segments — apparel, new cars — or you look at some of the services segments — housing, leisure, hospitality — they’re all indicating softening pressures.”

The overall consumer price index was up 4.9% from a year earlier, registering the first sub-5% reading in two years. Excluding food and energy, the so-called core inflation rate also moderated, to 5.5%.

Declines in airfares and hotel rates helped keep a lid on a measure of core services prices, which rose just 0.1% in April, based on Bloomberg calculations. Fed officials have stressed the importance of excluding energy and housing when assessing the outlook, though they compute that metric based on a separate index published toward the end of the month.

Core goods prices logged their biggest increase since June, largely due to the biggest advance in used-car prices in nearly two years. Analysts don’t see that continuing in the coming months, given a pullback in private-sector gauges of wholesale prices that tend to lead the BLS measure.

Prices of new vehicles fell, meanwhile, while those for appliances dropped by the most on record.

Investors greeted the figures as a sign that the central bank is unlikely to keep tightening after it raised its benchmark rate last week above 5% for the first time since 2007.

“The key development here is that core services ex-housing really seems to be turning the corner,” said Yelena Shulyatyeva, a senior US economist at BNP Paribas. “This is exactly the development that they are looking for to presumably pause.”

What Bloomberg Economics Says...

“While the April CPI report isn’t exactly reassuring, it also won’t jolt Fed officials into signaling another rate hike in June, given their expectation that the full disinflationary impact from tighter credit conditions has yet to show up. However, the slow progress in reducing core inflation highlights how unlikely it is that the Fed will cut rates this year.”

— Anna Wong and Jonathan Church, economists

For the full note, click here

Elsewhere in the report, energy costs climbed 0.6%, driven by higher pump prices. While grocery costs fell for a second month, the price of dining out continued to rise. Baby food and formula prices rose by the most on record.

Shelter costs, which are the biggest services component and make up about one-third of the overall CPI index, rose 0.4% last month, the smallest in over a year that reflected cheaper hotel stays. Measures of rent advanced, but the increases were below the average of the past 12 months.

Because of the way the housing metrics are calculated, there’s a significant lag between real-time price changes and the government statistics.

While the report was mostly taken as good news for the inflation outlook, some analysts sounded a note of caution on the moderation in services inflation, warning that it may not yet be durable.

“I’d be very cautious about reading too much into this slowdown,” Omair Sharif, president of Inflation Insights LLC, said in a note to clients. “Hotel rates fell sharply, but I’m not sure that you want to count on hotel rates to continue to post a seasonal drop that was among the weakest in 20 years.”

--With assistance from Molly Smith and Vince Golle.

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