Commentary Directory
- 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
- The End of Summer Sees the End of Disinflation in Europe
- Labor Market Indicators are Starting to Unify on Easing in Hiring
- Inflation and Tight Financial Conditions Weigh on the German Consumer
- Euro Area Money Supply Contracts for the First Time Since 2010
- Dismal Economic Data Out of Germany
- Core Durable Goods New Orders See Gentle Uptrend in July
- More UK Data Pointing to Q3 Decline
- Whispers of a UK Contraction in Q3
- Japan's Core Inflation Resumes Uptrend in July
- Early July Economic Data Leads to a Sharp Increase in Q3 Growth Expectations
- UK CPI: Energy Inflation Crashes but Services Inflation is Still Sticky
- China's Weak Start to Q3 Means More PBoC Easing
- A Breather for the Eurozone as Inflation Hits Two-Year Low
- Germany's September CPI Report: A Clearer Picture of Inflation Trends
- US Manufacturing Demonstrates Resilience Amidst Volatility in August
- The ECB Prepares to Address Excess Liquidity Through the MRR
- Bank of Japan is Too Optimistic on Inflation
- The Bank of England Pauses in a Near Split Decision
- UK Inflation August Update: A Precursor to the Bank of England's Announcement
- Housing Starts Tumble in August Amid Rising Mortgage Rates
- US Retail Sales Grow at Fastest Monthly Rate Since the Start of the Year
- US Consumer Prices Surge in August Driven by Energy Costs
- August NFIB Survey Showed a Tough Environment for Small Businesses
- All Signs Point to a Weaker Labor Market in August
- Chinese CPI Trying to Buck the Deflation Trend
- Energy Prices Rise but the Core Disinflationary Trend is Maintained in September
- PPI's Quiet Rise and the Energy Elephant in the Room
- Small Businesses Grapple with Inflation and Financial Strain in September
- A Wacky September Jobs Report Shows Strong Labor Market
- A Look at the Fragile US Labor Market Ahead of the Nonfarm Payrolls Report
- 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?
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.