Inflation up, but not worse than expected.
The April CPI rose by 0.6 percent for the month, with the core rate (excluding the volatile food and energy components) rising by 0.4 percent. These monthly gains pushed the 12-month trend rates up by 3.8 percent for the total CPI and by 2.8 percent for the core. These figures were about as expected by financial markets.
Once again, jumping energy prices were responsible for much of the overall increase, rising by 3.8 percent for the month (although this was down from the 10.9 percent rise in March). Food prices were up by 0.5 percent, pushed higher in part by rising fertilizer costs (elevated by rising energy prices).
Part of the gain in the core CPI came from a one-time technical adjustment to the shelter component, pushing it up by 0.6 percent. That is unlikely to be repeated in coming months, taking some pressure off of the core rate. Airline fares rose by a strong 2.8 percent (after a similar rise in March), with rising jet fuel costs the likely culprit.
These are not good numbers. Inflation is rising. But the core rate increases remain moderate once adjusted for the impact of jet fuel (an energy component) on air fares and the technical adjustment to the shelter component. So, if there is any good news in the April CPI report, it is that there is only modest evidence that higher energy prices are filtering into core inflation.
There will be one more CPI report before the next FOMC meeting (as well as the April PCE price data later this month). The FOMC members will be looking closely at whether the situation in the Middle East has allowed energy prices to decline (or if they are rising further) and the extent to which higher energy prices are leaking into other prices in the economy.
David W. Berson, Ph.D., CBE
Chief Economist
Feedback |Bio
Sign up for our Market Commentaries
Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.
Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.
