ANALYST: 'Core Disinflation Is Over'

Consumer prices came in almost exactly as expected. Here’s the rundown:

  • CPI month-over-month: 0.3% (0.3% forecast; March 0.2%)
  • CPI ex food and energy month-over-month: 0.2% (0.1% forecast, March 0.2%)
  • CPI year-over-year: 2.0% (2.0% forecast; March 1.5%)
  • CPI ex food and energy year-0ver-year 1.8% (1.7% forecast; March 1.7%)

Here’s the chart:

Pantheon’s Ian Shepherdson says this means “core disinflation is over,” writing:

The April CPI rose 0.3%, in line with the consensus. But the core rose 0.2%, a tenth above the consensus, 0.1%. The core increase was broad-based, with primary rents up 0.3%, owner-equivalent rents up 0.2%, and above-trend increases in new and used vehicle prices, recreation, education and medical services. In addition, airline fares jumped 2.6%. One disappointing core inflation number proves nothing, but note 3-month annualized core is now 2.3%, up from 1.4% in Jan. The upward trend in rents is real, given the tight rental market, and primary rents are now up 3.1% y/y, the biggest gain in exactly five years. OER is lagging behind a bit at 2.6% y/y but it will catch up; together, rents are 40% of the core. In short, core disinflation is over; rents and profits margins – see the PPI – are a threat.

And here’s the table. Unlike for wholesale, consumer food price growth did not change much from March.

Yesterday we learned producer prices climbed more than expected.

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