Has Wednesday’s CPI data brought about any surprises?

The CPI figure for April mostly matched expectations. The 0.4% increase in both the headline and core CPI indicated a gradual rather than a fast improvement in the inflation environment. An increase in petrol prices in April was partially offset by falling grocery store prices and energy service costs, and a sharp increase in the cost of used cars was similarly restrained by falling prices for travel-related services including airline and hotel stays.

Overall, today’s report has no effect on our expectations for inflation or Fed policy. Inflation is anticipated to decelerate further in the next months as supply grows, and the FOMC could probably keep the federal funds rate at its current level for the foreseeable future.

In April, inflation decreased for the ninth consecutive month as rising petrol prices were offset by sustained moderation in grocery prices.

The consumer price index published by the Labour Department shows that consumer prices rose 4.9% from a year earlier, down from 5% in March and a 40-year high of 9.1% last June. Since April 2021, that represents the smallest yearly growth. Prices increased 0.4% on a monthly basis after rising 0.1% in March.

Still, the data offered some signs that inflation is continuing to cool. Airline fares dropped 2.6% in April, and hotel prices plunged 3% after four straight monthly increases.