Directory
- 2020
- June
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- September
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- December
- 2021
- January
- Thoughts on GME and This Week in the Stock Market
- Record Home Price Levels Point to Strength in Post-Pandemic Economy
- The Stock Market Looks Overvalued, but It's Probably Not
- China GDP Growth Surpasses Expectations
- President-elect Joe Biden Introduces His "American Rescue Plan"
- Political Polarization Intensifies with Another Impeachment Along Party Lines
- Metal Demand Has a Bright Future in 2021 and Beyond
- What Happened to That US-China Trade Dispute?
- Civil Unrest, A Rising Threat to the 2021 Economy
- What's in the $900 Billion Relief Plan?
- February
- Long Term Employment Shifts Caused by the Pandemic
- Earnings Provide Positive Surprise Despite Pandemic
- Renewable Energy Under Fire in Texas
- Yellen Aims for Full Employment
- Minimum Wage Research in the Spotlight as a Hike Looks Inevitable
- Non-Residential Construction Soft in the Pandemic Economy
- March
- Views on Interest Rates and the Move in Treasury Yields
- Inflation Indicators Healthy but Still on the Rise
- Risky Assets Sell-off Despite Optimistic Economic Outlook
- The Latest on Vaccinations and What it Means for Growth
- April
- May
- Highlights of the Fed's "Economic Well-Being of U.S. Households in 2020" Report
- Relative Factors and Forward Change in Federal Funds Rate
- Can Wage Growth Keep Up With Inflation?
- June
- July
- August
- With That, We Carry On
- Supply Pressures Looking to Peak
- Cars are Still Expensive, Workers are Still Needed
- Recovery Continues, but Delta Looms
- September
- Fed Eyes Tapering While China Sees a Setback
- Review the Fed Previews
- No Tapering Yet
- Labor Day on Labor Day
- October
- Delayed or Disappearing Growth?
- Supply and Demand Mismatch will be Evident during the Holiday Shopping Season
- Workers Find Leverage in a Tight Labor Market
- Cautiously Optimistic
- Sour Expectations Take Down the Market
- November
- Q3 Earnings Were Surprisingly Good
- Inflation Weights on Bonds and Consumer Sentiment
- FOMC Tapers While Trade and Employment Flash Mixed Signals
- December
- 2022
- January
- Inflation is Getting Broader, Not Cooler
- Unemployment Insurance During the Pandemic
- A Year of Normalization
- What Will GDP Growth Look Like in 2022?
- February
- March
- April
- May
- June
- August
- Student Loans Targeted by the Biden Administration
- The Chicago Fed Index Reverses in July
- Chinese Economic Data Faltered in July
- Stellar Jobs Report Bucks Recession Fears
- September
- Bank of Japan Punished for Dovish Policy Stance
- Expect 75 Today
- Manufacturing Weakness in Germany has Implications for Euro Area Growth
- October
- 2023
- February
- April
- Q1 GDP Growth Jumps 1.1% on Strong Personal Consumption
- A Strong March Leads to a Surge in Chinese GDP in Q1 2023
- Durable Goods Retail Sales Suffer from High Interest Rates and Wary Consumers
- Choppy GDP Means UK Should Avoid Q1 Recession
- Japanese Consumer Confidence Jumps to Highest Level in Over a Year
- May
US CPI Cools Across All Segments that the Fed Cares About
Jacob Hess
May 10, 2023
- CPI
- Inflation
The latest release of the US CPI showed that inflation continues to calm, especially in the service sector. The data reveals that CPI grew by 0.4% MoM and 4.9% YoY in April, down from 5.0% YoY in March. First the volatile components, food CPI was unchanged for the second month in a row, with food at home falling by 0.2% MoM, offset by food away from home, which was up by 0.4% MoM. The YoY change in the food index slowed from 8.5% YoY to 7.7% YoY in April. The energy CPI rose by 0.6% MoM in April, but it was still down on an annual basis thanks to a -3.5% MoM decline in March. Natural gas prices fell by -4.1% MoM, while gasoline prices grew by 3.0% MoM, but gas prices were still down by -12.2% YoY.

Core CPI (excluding food and energy) grew by 5.5% YoY (0.4% MoM), falling just slightly from the 5.6% YoY reading in March. Within that, the goods CPI was the fastest growing on the month, up by 0.6% MoM, as used cars and trucks bounced back by 4.4% MoM, and apparel and medical care commodities saw slight gains. Overall, goods inflation was still low, up by just 2.0% YoY in April versus 1.5% YoY in March. In the services sector, the shelter CPI expanded, but at a slower rate of 0.4% MoM, which helped the services inflation rate to fall by -0.5 ppts to 5.8% YoY. Other services segments fell as well, with transportation services down by -0.2% MoM and medical care services down by -0.1% MoM.
The April CPI report is almost entirely composed of good news as inflation trends looked favorable in just about every segment. The moderation in the YoY change in the food index, falling energy CPI on an annual basis, and a slower rate of expansion in shelter CPI were some of these trends, and they all were important factors contributing to the decline in overall inflation from March to April. The only area where prices picked up more than usual was goods inflation, heavily influenced by a bounce in used vehicle prices. However, while goods inflation has picked up, it is still relatively low at 2%. Removing all of what the Fed might consider “the fat” in the index, the "Supercore" index (all items less food, shelter, energy, and used cars and trucks) was up just 0.2% MoM and 4.7% YoY in April, down slightly from 5.1% YoY in March. These data points support a pause in June as there was significant progress made in the areas where the Fed is looking. Its focus should shift to wages and the labor market as it now appears to be the final piece in the inflation puzzle to solve.