Strongest Inflation in 38 Months

This morning, the government reported that the headline CPI rose by 0.4% in April. That’s the largest increase in 38 months. Wall Street had been expecting an increase of 0.3%. The big driver was gasoline prices which rose by 8.1%. Still, gas is down a lot in the last year.

Here’s a look at the monthly increase in headline CPI.

The core rate of inflation, which excludes food and energy, rose by 0.2% last month. That matched expectations. Here’s the recent trend in core. Notice the big increase in January and February:

Despite the uptick in headline inflation last month, I still think the Fed’s words are overly hawkish and I don’t expect much in the way of rate increases this year.

Posted by Eddy Elfenbein on May 17th, 2016 at 9:47 am

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