New Consumer Price Inflation (CPI) numbers for the month of April are out this morning, tracking our inflation journey downward, if ever so slowly. Month over month headline CPI came in at +0.4% — 10 basis points (bps) hotter than consensus estimates, and a big swing from the -0.5% originally posted a month ago. Though this is essentially moving in the wrong direction, over the longer term we see CPI has come down notably from the multi-year high +1.2% posted in June of 2022.
The core CPI month-over-month (m/m) read — stripping out volatile food and energy prices — also came in at +0.4%, doubling the +0.2% analysts were expecting. A month ago, we were looking at +0.1% on core CPI m/m, so again we look to be getting precariously hotter, though we’re still only half the +0.8% highs we saw way back in April of 2021. If anything, at a glance we can see how core CPI results are proving more stubborn and sticky; in this month’s report, we can also see those food and energy costs were more of a non-factor than normal.
Where economists and market journalists use CPI data as short-hard for inflation, however, is in headline CPI year over year (aka the “Inflation Rate”). Thus, these are considered the more meaningful of CPI information, and as such, we see an improvement to the downside: to +4.9% headline from an expected +5.0%, which was also the previous print. On this metric, we have moved down every single month since June ’22’s monstrously high +9.1%, which set a high water mark not seen since Ronald Reagan’s first year as president.
Core CPI year over year further illustrates the inflationary stickiness: +5.5% is exactly what was expected by analysts, and down only begrudgingly from the +5.6% core CPI year over year from March. This again is down substantially — 100 bps — from the 40+ year high +6.6% posted in September of last year. So while we may applaud the first Inflation Rate with a 4-handle since before the Great Reopening, we still see core numbers considerably higher than the Fed’s optimal +2% inflation.
Pre-market futures are happy in the immediate aftermath of this report: whereas directly prior we were seeing negative numbers in both the Dow and S&P 500, with the Nasdaq basically flat), these blossomed to +100 points on the Dow, +15 on the S&P and +75 points on the Nasdaq. In the minutes since these numbers have started becoming absorbed, markets are even headed higher: +160 points on the Dow, +30 on the S&P and +125 points on the Nasdaq.
Tomorrow we’ll get the sister report to CPI — the Producer Price Index (PPI), which often can be seen as a forward indicator of future CPI — but this morning’s numbers are considered the most important of the week. In fact, though perhaps frustratingly slow in its absorption of wayward inflation, the Fed’s methods of interest rate hikes are proving in real time to have a gently cooling effect on the economy — the better with which to execute a “soft landing,” whenever that might be.
Image: Bigstock
CPI Rose Slower Than Expected in April
New Consumer Price Inflation (CPI) numbers for the month of April are out this morning, tracking our inflation journey downward, if ever so slowly. Month over month headline CPI came in at +0.4% — 10 basis points (bps) hotter than consensus estimates, and a big swing from the -0.5% originally posted a month ago. Though this is essentially moving in the wrong direction, over the longer term we see CPI has come down notably from the multi-year high +1.2% posted in June of 2022.
The core CPI month-over-month (m/m) read — stripping out volatile food and energy prices — also came in at +0.4%, doubling the +0.2% analysts were expecting. A month ago, we were looking at +0.1% on core CPI m/m, so again we look to be getting precariously hotter, though we’re still only half the +0.8% highs we saw way back in April of 2021. If anything, at a glance we can see how core CPI results are proving more stubborn and sticky; in this month’s report, we can also see those food and energy costs were more of a non-factor than normal.
Where economists and market journalists use CPI data as short-hard for inflation, however, is in headline CPI year over year (aka the “Inflation Rate”). Thus, these are considered the more meaningful of CPI information, and as such, we see an improvement to the downside: to +4.9% headline from an expected +5.0%, which was also the previous print. On this metric, we have moved down every single month since June ’22’s monstrously high +9.1%, which set a high water mark not seen since Ronald Reagan’s first year as president.
Core CPI year over year further illustrates the inflationary stickiness: +5.5% is exactly what was expected by analysts, and down only begrudgingly from the +5.6% core CPI year over year from March. This again is down substantially — 100 bps — from the 40+ year high +6.6% posted in September of last year. So while we may applaud the first Inflation Rate with a 4-handle since before the Great Reopening, we still see core numbers considerably higher than the Fed’s optimal +2% inflation.
Pre-market futures are happy in the immediate aftermath of this report: whereas directly prior we were seeing negative numbers in both the Dow and S&P 500, with the Nasdaq basically flat), these blossomed to +100 points on the Dow, +15 on the S&P and +75 points on the Nasdaq. In the minutes since these numbers have started becoming absorbed, markets are even headed higher: +160 points on the Dow, +30 on the S&P and +125 points on the Nasdaq.
Tomorrow we’ll get the sister report to CPI — the Producer Price Index (PPI), which often can be seen as a forward indicator of future CPI — but this morning’s numbers are considered the most important of the week. In fact, though perhaps frustratingly slow in its absorption of wayward inflation, the Fed’s methods of interest rate hikes are proving in real time to have a gently cooling effect on the economy — the better with which to execute a “soft landing,” whenever that might be.