After four consecutive months of higher-than-anticipated Producer Price Index (PPI), analysts were closely watching for the Consumer Price Index (CPI) to gauge inflationary trends. The CPI for the month registered a modest increase of 0.3% compared to expectations of 0.4%. Year-on-year headline CPI decreased to 3.4%, in line with forecasts.
Digging deeper, the growth in services slowed slightly month on month, while energy costs showed signs of reacceleration on a 3-month and 6-month annualized basis. Conversely, prices for used cars and trucks, along with gas utility prices, saw declines month on month. Core CPI, excluding volatile food and energy prices, rose by the expected 0.3% month on month, with year-on-year growth slowing to 3.6%.
Core goods prices continued to deflate, while core services prices maintained an upward trajectory. April’s core CPI year on year figure of 3.6% marked its lowest level in three years, aligning closely with the 1-month annualized rate. Housing costs, a significant contributor to core CPI inflation, moderated slightly in April compared to previous months.
The majority of the excess core CPI inflation year on year stemmed from housing and auto insurance costs. Core non-housing services saw increased activity but had limited impact on the annual inflation rate. Despite not being part of the core index, grocery prices experienced a decline of 0.2% month on month in April, contradicting expectations. However, skepticism remains regarding the accuracy of this data.
The SuperCore CPI, excluding shelter costs, rose by 0.5% month on month, reaching 5.05% year on year, its highest level since April 2023. Within the SuperCore CPI, education costs saw an increase, while transportation services dominated on a year-on-year basis. Although shelter costs rose month on month, they continued to decelerate year on year.
Goods prices experienced their sharpest deflation since April 2004, while services prices remained around +5.3% year on year. Notably, consumer prices have not decreased in any month since President Biden took office, with overall prices up by over 19.5% since then, compared to an 8% increase during Trump’s term. This translates to an average annual rise in prices of 5.5% under Biden, significantly higher than the 1.9% average during Trump’s tenure.
Despite expectations of a miss in CPI data, the actual outcome differed from anticipated results, suggesting that upcoming CPI figures may deviate even further from expectations in the coming months.