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.
