CPI: Inflation Pressures Continue to Ease

Bottom Line: Inflation pressures, even at the core level, continue to ease. Headline CPI is now flat over the last three months. Core CPI, just 0.6% annualized over the last three months, is running at 1.7% annualized over the last six months and 1.9% over the last 12 months. Decelerating growth in "owner's equivalent rent" (an estimate of the cost of shelter) and another month of flat to declining prices in medical-related components, new and used vehicles and cell phone services are helping ease overall inflation pressures again. The CPI ROSE by 0.2% in April, in-line with market expectations for an increase of 0.2%.

• Food prices increased by 0.2% while energy prices rose by 1.1%.
• Prices for gasoline rose by 1.2% while prices for fuel oil increased by 3.8%, prices for electricity climbed by 0.6%, and prices for natural gas rose by 2.2%. Energy prices are now 9.2% ABOVE their year ago level.
• Overall consumer prices are now 2.2% ABOVE their year ago level; in April 2016, consumer prices were 1.1% ABOVE their year ago level.

The Core CPI ROSE by 0.1%, compared with market expectations for an increase of 0.2%.

• Prices for commodities excluding food and energy commodities fell by 0.2%.
• Gains in tobacco (+4.2%) and alcoholic beverages (+0.3%) were offset by declines in medical care (-0.8%), used cars & trucks (-0.5%).
• Prices for services excluding energy services rose 0.1% with modest increase in shelter (+0.3%), owner's equivalent rent (+0.2%), and medical care services (+0.01%).
• Core consumer prices are now 1.9% ABOVE their year ago level; in April 2016, consumer prices were 2.1% ABOVE their year ago level.