US Consumer Prices Are Rising At Their Fastest Pace In 3 Years
Bearing in mind the one-off impact of BLS correcting for shutdown-related distortions (in rent/shelter) from last October., this morning's CPI was expected to come in hot as the impact of the Iran war starts to spread (energy, airfares, transport) and the melt-up in memory costs (unrelated to war) as the token wars continue.
As a reminder, March saw headline CPI in line (energy) while Core CPI actually printed cooler than expected. and we suspect most attention will be on the Core side again today with investors 'looking through' short-term energy-driven cost pressures.
Headline CPI rose 0.6% MoM (as expected), pulling headline up 3.8% YoY (hotter than the 3.7% expected) and the hottest since May 2023...
Energy and Food costs dominated the rise in headline CPI along with Core Services...
New- and Used-Vehicle pries remain stable as Shelter jumped (as expected)...
On a short-term annualized basis, it's all about Energy...
But, the surge in the Energy subcomponent of CPI is perhaps peaking as oil has stabilized/eased...
Core CPI rose more than expected in April (up 0.4% MoM vs +0.3% exp), pulling the YoY rise in prices up by 2.8% (also hotter than expected).
While that is the highest since Sept 2025, it is clear that whatever impact the war is having, it is not spreading wildly into the broad market... yet.
However, Core Services dominated the price rises (perhaps some energy cost impact pull-through)...
Finally, are we really ready for a 70s-style rebound in inflation?
Bonds may be hinting but stocks certainly are not, even as consumer sentiment hits rock bottom.
