The headline number wasn't great, as expected, but key core measures (used to see through to the longer term trend) went a long way to keeping inflation anxiety on a low simmer. From the Cleveland Fed:
According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.2% annualized rate) in April. The median CPI is a measure of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report.
Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.5% (6.4% annualized rate) in April. The CPI less food and energy remained unchanged (rose 0.6% annualized rate) on a seasonally adjusted basis.
Over the last 12 months, the median CPI rose 2.3%, the CPI 3.5%, and the CPI less food and energy 2.2%.
Percent Change From Previous Month Nov. Dec. Jan. Feb. Mar. Apr. CPI 0.3 0.0 0.1 0.4 0.6 0.5 CPI less food & energy 0.2 0.2 0.2 0.3 0.4 0.0 MEDIAN CPI 0.1 0.2 0.3 0.2 0.2 0.2 Percent Change, Last 12 Months Nov. Dec. Jan. Feb. Mar. Apr. CPI 3.5 3.3 3.0 3.0 3.1 3.5 CPI less food & energy 2.2 2.2 2.3 2.4 2.3 2.2 MEDIAN CPI* 2.2 2.3 2.4 2.4 2.4 2.3
That zero in the ex food and energy column was a bit of a surprise, but in the end it reflected, in part, a reversal of some strangeness in March. From Bloomberg:
April was the first month since November 2003 that the so- called core rate of inflation failed to increase, as costs of hotel stays and apparel slumped after surging the previous month, the Labor Department said today in Washington.
Here's more, from the Wachovia Economics Group, via FXStreet.com:
Part of the improvement is simply a payback for March, which saw core prices jump 0.4%. That increase was at least partly tied to the early Easter, which resulted in much higher prices for hotel rooms and clothing. Lodging costs fell 1.2% in April, partially reversing a 3.9% jump in March. Clothing costs fell 0.6%, following an 0.8% rise in the previous month. Medical care costs also rose less rapidly, climbing 0.2% in April following a 0.5% rise in March. Homeowners’ equivalent rent, which is where housing costs show up in the inflation data, rose just 0.1% in April, compared to a 0.3% rise the previous month.
There is a good chance that the run-up in the core CPI has topped out.
The markets took it all well. From MarketWatch:
The report is reassuring in that spiking energy costs over the past six months have not fed into prices charged for other goods and services. Energy prices moderated in May.
Bonds rallied in response. The yield on the benchmark 10-year note fell to 4.06%, the lowest since February. The dollar weakened, while stocks gained.
Not everyone, however, is convinced that the inflation beast has been tamed. From Reuters:
"The biggest reason for the tame core index was that clothing and computer prices fell sharply," said Joel Naroff, president of Naroff Economic Advisors.
"When you look at the details, they were not very pretty. Food costs were up sharply while housing increased at a solid pace," he said of the overall rise in the CPI.
Nonetheless, most of the commentary was more in line with this, from the aforementioned Bloomberg article:
"The prospect of inflation galloping away from the Fed is clearly off the table, and there is not much reason to even contemplate the possibility of a 50 basis point tightening for the foreseeable future,'' said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut.
Reporting from Bloggersburg:
Kash thinks its still too early to come to any conclusions. Same with Global Trader's Diary.
UPDATE:
The Big Picture has the Wall Street Journal roundup of commentary.
Economics Unbound dives deep to recover the story on telecom prices.
Tim Duy weighs in at Economist's View, and says the CPI report just means the same old same old from the Federal Open Market Committee.
The Capital Spectator warns against declaring victory.
MORE: At The Big Picture.