Consumer Prices Slightly Hotter Than Expected in April
Consumer prices in April rose more than anticipated, according to the latest data from the Bureau of Labor Statistics. Consumer prices rose 0.3% in April, slightly below the 0.4% rise seen in March but surpasses the 0.2% economists had predicted.
By the numbers:
- Monthly increase: The 0.3% rise in April’s CPI for All Urban Consumers indicates a modest acceleration in inflation, though still lower than the previous month’s rate.
- Year-over-year: Despite the hotter monthly figure, annual inflation fell to 3.4%, down from 3.5% in March, marking the first decline in three months.
Good News: The food index remained unchanged in April, slowing the annual rate to 2.2%, the lowest since May 2021.
Bad News. Energy costs rose by 1.1% in April, mirroring the increase seen in March. Notably, the gasoline index surged by 2.8%, following a 1.7% rise in March, marking the third consecutive monthly increase.
The Core. Excluding food and energy, the core CPI rose 0.3% in April, down from 0.4% in March, the lowest monthly increase since December 2023.
- Year-over-year, core prices slowed to 3.6%, slightly better than the 3.7% expected by economists and the lowest level since May 2021.
Housing. Shelter costs rose 0.4% for the third straight month in April which slowed the year-over-year index to 5.5%, the lowest level since May 2022.
- IMPACT: The rise in shelter costs accounted for two third of the rise in the core index while the rise in shelter and gasoline were over 70% percent of the monthly increase in the index for all items.
The big picture:
- The slight rise in consumer prices suggests a mixed inflation outlook. While the monthly increase exceeded expectations, the overall annual rate showed a slight decrease, offering a bit of relief.
- The unchanged food index and slowing core prices indicate some stabilization in certain sectors, though the continued rise in energy and housing remains a concern.
Mortgage Rates Impact. A slightly hotter report would normally cause a slight sell-off in bonds, but today’s reaction is the exact opposite with the 10-year yield falling almost 10 bips immediately after the report. However, a flat retail report is also influencing the markets.
