US Core CPI Rises 0.29% in April, Easing from March

In April 2024, the Core Consumer Price Index (CPI) in the United States showed a modest increase of 0.29% month-over-month (MoM), slightly easing from March's figures.

by Faruk Imamovic
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US Core CPI Rises 0.29% in April, Easing from March
© Getty Images/Spencer Platt

In April 2024, the Core Consumer Price Index (CPI) in the United States showed a modest increase of 0.29% month-over-month (MoM), slightly easing from March's figures. This rise was broadly in line with market expectations, providing some reassurance to investors and policymakers.

A Detailed Look at the Numbers

The report highlighted a mixed bag of details. Encouragingly, there was a noticeable slowdown in the pricing of services, particularly in the rent and owners' equivalent rent (OER) components. This deceleration was also evident in services excluding rent and OER.

However, the core goods sector painted a different picture. Although there was some modest relief primarily driven by used cars and trucks, core goods continued to trend upward. This dichotomy suggests a complex landscape where some inflationary pressures are easing while others persist.

Inputs from the Producer Price Index (PPI) earlier in the week supported a similar narrative. The data suggests an underlying trend consistent with a 0.25% MoM increase in the core Personal Consumption Expenditures (PCE) for April, slightly above but close to previous forecasts. This alignment indicates that the Federal Open Market Committee (FOMC) is likely to maintain its current policy stance, with a rate cut anticipated only in 2025.

Breakdown of April's CPI Components

Core Goods:

Core goods prices declined by 0.11% MoM, driven solely by a sharp drop in used cars and trucks. Excluding these volatile items, core goods prices were firmer, rising by 0.04% MoM. Both measures, however, are showing an upward trend, indicating that the relief from core goods may be short-lived.

Core Services Excluding Rent/OER:

This category saw a significant slowdown, increasing by 0.42% MoM, the lowest monthly reading since December. The deceleration was mainly due to reduced prices in medical care services and transportation services.

Rent of Primary Residence and OER:

Both measures resumed their monthly declines, although to different extents. Rent of primary residence increased by 0.35% MoM, the lowest figure since August 2021, while OER inched lower to 0.42% MoM. This differential reflects the relatively firmer rents in the single-family market compared to the multi-family market.

Looking ahead, the report anticipates a gradual slowing in the pace of these measures through the end of the year. However, caution remains regarding the magnitude and timing of this relief.

Implications for Future Policy

The data from April, combined with insights from the PPI, suggests a stable yet cautious economic environment. Chair Powell and the FOMC may find some reassurance in these numbers, reinforcing the current guidance that any future policy changes will likely be gradual.

The mixed signals from different components of the CPI highlight the complexities in managing inflation. While some sectors show signs of easing, others, particularly core goods excluding used cars and trucks, continue to pose challenges. 

United States
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