The good news from the Bureau of Labor Statistics’s CPI report is that annualized monthly CPI inflation fell from 10.89% (March) to 7.96% (April). Compared to a year ago, prices are up 3.78% (April) compared to 5.47% (March). Our measure of trend CPI inflation rose from 5.47% to 6.30%.
Core CPI inflation (that is, excluding food and energy) rose from 2.38% to 4.61% on an annualized monthly basis; from 2.60% to 2.74% for the year-over-year. Our measure of trend core CPI inflation rose from 2.58% to 3.26%.
Of course, the big news is the energy price shock due to the ongoing conflict in the middle east. Looking at energy commodities (gasoline and fuel oil), April (92.8%) also fell compared to March, 919%, but the March number was in rarefied air, see the scale on the vertical axis. Moreover, inflation expectations have begun to creep up. The hope, of course, is that the oil supply problem will be a temporary blip.
The Personal Consumption Expenditure price index will not be released for a couple of weeks. While the CPI for April suggests that monthly PCE inflation may fall, all other measures — including the all-important core PCE inflation — are likely to continue moving away from the FOMC’s 2% target.
