Uh-oh?
Core inflation in the US ran faster than expected last month, the BLS said Tuesday, in a release that may suggest the oil shock’s beginning to seep into non-energy sectors of the world’s largest economy, even as the jury’s still out on that all-important question.
The 0.4% (0.376% unrounded) MoM print for core CPI marked an acceleration from March, topped the official consensus and counted as the quickest since January of 2025. But note that the whisper number, as it were, was closer to 0.35%, so you might suggest this actually wasn’t a surprise.
The YoY pace for the core gauge, at 2.8%, was likewise warmer than expected.
On the all-items index, price growth was 0.64% MoM and 3.8% YoY. That latter figure suggests overall inflation outpaced wage gains last month. So, everyday people are back in an all-too-familiar scenario where implied real pay growth’s negative.
The gasoline index rose 5.4% from the prior month after a record-breaking 21.2% advance in March. The 3.8% advance for the broad energy index accounted for 40% of the overall, all-times increase in April.
Economists and market participants may fret at the grocery gauge, which posted its largest monthly gain since the summer of 2022, when the world was reeling from the Ukraine war.
Five of the six major grocery store food categories showed a gain in April.
Whether that’s related to the war or not, households will assume it is. And make no mistake: Expensive groceries are a factor in a succession of worst-ever prints on the nation’s marquee measures of consumer sentiment.
Glancing at the core inputs, apparel prices rose 0.6% from March to April. Although slower than the prior two months’ sequential increases, that nevertheless represented a third straight elevated monthly print. That said, prices for household furnishings fell, as inflation ebbed for furniture, bedding and appliances.
Air fares rose nearly 3% from March and almost 21% YoY. You can (obviously) blame jet fuel (i.e., the war) for that.
In the normal course of things, you’d call a 0.6% increase on the shelter gauge alarming, but there’s a distortion there from quirks related to the government shutdown in October. Long story short, OER and the rent equivalent index — which rose more than 0.5% each — were guaranteed to exhibit a “snapback” effect, so to speak, pushing up inflation on the services side.
Without braving additional editorializing around the statistical methodology, suffice to say the 0.6% increase on the shelter gauge, ostensibly the largest since September of 2023, probably gets an asterisk.
The CPI-derived version of so-called “supercore” inflation (i.e., core services stripping out shelter) rose 0.35%, more than double the prior month’s pace. That should give the Fed pause, but remember: The Fed’s under new leadership as of next meeting.
Frankly — and I realize this is maddening for those of you who think things like official government inflation data should matter for markets, particularly under the current geopolitical circumstances and considering what the developed world’s just been through on the inflation front — I doubt markets are going to pay this release a lot of attention.
These figures are just too noisy, too full of quirks and, more broadly, it’s just too soon to know how the energy shock’s ultimately going to impact underlying price growth.
