CPI: Energy Prices Increase, Core Inflation Modest

May 17, 2016
Bottom Line: Headline consumer inflation increased in April, more than expectations as energy prices increased. Consumer prices are now 1.1% above their year ago level. Meanwhile, core consumer prices rose modestly and are 2.1% above their year ago level. Owners' Equivalent Rent (a major component of CPI that is an estimate of the cost of shelter) rose by 0.3%, 3.1% year-over-year and has moved 30 bps over the past year. Overall inflationary pressures at the consumer level still remain modest but are rising now compared to year-ago levels. The CPI ROSE by 0.4% in April, compared with market expectations for an increase of 0.3%. Food prices increased by 0.2% while energy prices jumped by 3.4%. Prices for gasoline rose by 8.1% while prices for fuel oil increased by 4.2%, prices for electricity slipped by 0.3%, but prices for natural gas rose by 0.6%. Energy prices are still 8.7% BELOW their year ago level. Overall consumer prices are now 1.1% ABOVE their year ago level; in April 2015, consumer prices were 0.1% BELOW their year ago level. The Core CPI ROSE by 0.2%, in line with market expectations for an increase of 0.2%. Prices for commodities excluding food and energy commodities fell by 0.1%. Gains in medical care (+0.5%), alcoholic beverages (+0.2%) and tobacco (+0.1%) were partially offset by declines in new vehicles (-0.3%), used cars & trucks (-0.3%) and apparel (-0.3%). Prices for services excluding energy services rose 0.3% with moderate increases in transportation (+0.7%), owner's equivalent rent (+0.3%) and shelter (+0.3%). Core consumer prices are now 2.1% ABOVE their year ago level; in April 2015, consumer prices were 1.8% ABOVE their year ago level.
Article by contingentmacro