CONSUMER INFLATION KEEPS SPIKING

The big news from the Presstitute media and Washington was that the pace of U.S. inflation slowed in April for the first time since August 2021, with the Consumer Price Index (CPI) easing from an annual rate of 8.5 percent in March to 8.3 percent last month.

The grand celebration was that it was .2 percent lower than the previous month and ignored that The Street had expected the rate to slow to 8.1 percent.

Prices grew 0.3 percent in April, month on month, compared to 1.2 percent in March, also the least growth since last August.

The Producer Price Index also slackened in April (see related story in this issue) and ocean shipping rates have dropped slightly, Business Insider said, adding to hopes that inflation has peaked.

The core CPI, which ignores food and energy prices, grew at an annual clip of 6.2 percent in April, compared to 6.4 percent in March. However, April’s core CPI edged up 0.6 percent from March, when the index grew just 0.3 percent.

“The peak of inflation may be behind us, but today’s CPI report points to a long, slow descent or maybe even a plateau around 8 percent until prices start to drop significantly,” economist Robert Frick at the Navy Federal Credit Union, said to BI.

Month to month, energy prices fell the most, shrinking 2.7 percent overall, with gasoline prices down 6.1 percent—but still up 43.6 percent compared to a year earlier. Energy prices overall grew 30.3 percent over the past 12 months.

Still, transportation and utility gas services both added 3.1 percent to their prices.

Groceries have cost another 1 percent since March—the 17th consecutive month of increases—and 10.8 percent more compared to a year ago, the bureau said. However, April’s monthly gain was a third slower than March’s 1.5 percent.

Dairy prices added 2.5 percent and non-alcoholic beverages 2 percent. Eggs cost 10.3 percent more because avian flu is decimating chicken flocks.

However, the price of fruits and vegetables declined as the year moved deeper into the growing season.

New car prices were up 1.1 percent for the month and 13.2 percent year over year, the biggest yearly increase since 1949, according to The Wall Street Journal. 

Residential rents grew 4.8 percent over the past year, a scale of increase not seen in more than 30 years.

Also, prices for services are rising, which tends to reflect a larger jump in labor costs and could spark a wage-price spiral , with the two chasing each other higher in a feedback loop that, historically, has been hard to break.

Airline fares leapt up 18.6 percent in April from March, the sharpest one-month jump on record; restaurant menu prices ticked up 0.9 percent, month on month, the biggest four-week jump in seven months.

“Inflation is no longer contained to the supply chain,” Jeffries economist Aneta Markowska noted to the WSJ. “These pressures are becoming more broad-based.”

Many economists expect inflation’s rate to throttle back in coming months, the WSJ reported. 

Slower annual inflation rates will come to dominate the 12-month comparison as months further back in time, when inflation was higher, drop out of the calculation.

TREND FORECAST: Has inflation really peaked? There are too many wild cards to forecast an accurate assessment. How much damage has China’s two-month shutdown done to the supply chain, which has not yet worked its way through the world’s economy? On just that note, it will take at least three months to know whether inflation has spent most of its force.

Then there is the Ukraine War. With Russia taking control of more of the Black Sea with its defeating Ukrainian troops in Mariupol on Monday, how much of the wheat, sunflower oil, palladium, etc., will be held back from the global marketplace . . . and how much higher will the prices of those and other commodities rise?

Our analysis of socioeconomic and geopolitical trends indicates that, under current and emerging conditions, inflation will persist near 40-year highs in the United States.