Despite Mainstream Panic, US Consumer Price Inflation Tumbles To Lowest In Over 4 Years

While today’s CPI will be far less relevant now that the entire macro picture has been reset after this weekend’s trade war truce – which cut tariffs between US and China by 115% for 90 days…

…thus making any pre/post CPI number comparisons meaningless apples to oranges, the machines will certainly be reacting to what Bloomberg prints in the flashing red headline at 8:30am ET.

As we detailed here, higher-than expected inflation data is likely to accelerate the increase in yields spurred by the easing in trade tensions with China. 

As Bloomberg’s Alyce Andres notes, survey data ahead of Tuesday’s April CPI report sends a clear message that firms passed rising tariff-linked costs on to consumers. 

Higher Prices

• ISM Manufacturing prices expanded to 69.8, the highest since June 2022.

• ISM Services ticked up to 65.1 in April, the highest since January 2023.

• S&P Global US Manufacturing firms increased their output prices by the greatest degree since early 2023.

• S&P Global US Services prices advanced.

• Richmond Fed manufacturing showed prices received rose to 2.65 from 2.34 in March.

• New York Fed manufacturing prices received edged up to 28.7 from 22.4 in March.

• Philadelphia Fed manufacturing report showed prices received gained to 30.7 compared to 29.8 in March.

• Kansas City Fed manufacturing prices received surged to 29, up from 15 in March.

• Kansas City Fed non-manufacturing showed selling prices rose in April.

• Dallas Fed manufacturing outlook report showed prices received for finished goods advanced to 14.9, up from 6.3 in March.

• Dallas Fed services selling prices rose to 8.4 from 5.2 in the prior month.

• Chicago PMI showed prices expanded at a faster pace in April.

Lower Prices:

• New York Fed services report showed prices received declined to 26.0 from 28.7 in March.

• Philadelphia Fed non-manufacturing data reflected a plunge in prices received to -0.1 from 8.4 in in the prior month.

• Richmond Services prices received nudged down to 3.03 compared to 3.68 in March.

Optically, inflation indicators (hard, not soft survey) have notably deflated in the last month…

Source: Bloomberg

So, what did we get – did the ‘soft’ survey data once again completely decouple from the reality of ‘hard’ actual data?

SHOCKER – Despite the panic from the establishment, headline CPI disappointed, rising 0.2% MoM (below the +0.3% exp), pulling the headline down to +2.3% YoY (below the 2.4% exp) – the lowest since February 2021…

Source: Bloomberg

That’s quite a difference from the Democrat-sponsored surge in UMich inflation expectations (something it appears Democrats were unable to see or fear in 2021/2022 when President Biden was printing trillions in stimmies to save his base from actually working for a living)…

Source: Bloomberg

Under the hood, commodity prices just inched back into inflation (+0.1% YoY) while Services inflation continues to slide…

Source: Bloomberg

Headline CPI 0.2% MoM. Here are the details:

• The index for shelter rose 0.3 percent in April, accounting for more than half of the all items monthly increase.

• The energy index also increased over the month, rising 0.7 percent as increases in the natural gas index and the electricity index more than offset a decline in the gasoline index.

• The index for food, in contrast, fell 0.1 percent in April as the food at home index decreased 0.4 percent and the food away from home index rose 0.4 percent over the month.

But Core Services rose MoM…

Source: Bloomberg

Egg prices – so much in focus during Trump’s first few weeks after Biden’s shitshow – plunged 12.7% MoM… the biggest MoM drop since March 1984…

Source: Bloomberg

Core CPI also rose 0.2% MoM (below the 0.3% exp) leaving it up 2.8% YoY as expected (lowest since April 2021)…

Source: Bloomberg

Source: Bloomberg

Core CPI +0.2% MoM. Indexes that increased over the month include household furnishings and operations, medical care, motor vehicle insurance, education, and personal care. The indexes for airline fares, used cars and trucks, communication, and apparel were among the major indexes that decreased in April. Here are the details:

• The shelter index increased 0.3 percent over the month.

  • The index for owners’ equivalent rent rose 0.4 percent in April and the index for rent increased 0.3 percent.

  • The lodging away from home index fell 0.1 percent in April.

  • Shelter inflation 0.34% MoM, and 3.99% YoY, unch from a month ago and the lowest since Nov 2021

  • Rent inflation 0.27% MoM, and 3.98% YoY, down from 3.99% in March and the lowest since Jan 2022

  • 

• The index for household furnishings and operations increased 1.0 percent in April, after being unchanged in March.

• The motor vehicle insurance index rose 0.6 percent in April.

• The index for education increased 0.1 percent over the month, as did the index for personal care.

• In contrast, the airline fares index fell 2.8 percent in April, after declining 5.3 percent in March.

• The index for used cars and trucks fell 0.5 percent over the month, and the indexes for communication and apparel also declined.

• The new vehicles index and the recreation index were unchanged in April.

• The medical care index increased 0.5 percent over the month.

• The index for hospital services increased 0.6 percent in April and the index for physicians’ services rose 0.3 percent over the month.

• The prescription drugs index rose 0.4 percent in April.

And drilling down even more, the so-called SuperCore CPI (Services Ex Shelter) dropped to +3.01% YoY – the lowest since Dec 2021…

Source: Bloomberg

Recreation Services and Education costs are deflating…

Source: Bloomberg

Finally, as Goldman noted ahead of the print, whatever we do learn about tariff-related inflation today lags the rapidly-changing policy reality… so choose the size of the salt crystal to take as you react to the algos initial reaction to this data.

Is the inevitable trajectory of CPI higher given the recent surge in M2…

Source: Bloomberg

Real average weekly earnings rose 1.7% YoY – the best growth in wages since March 2021…

Source: Bloomberg

Brace for an avalanche of this statement repeated ad nauseum all day from establishment economists - “…we’re sure the inflation from tariffs will hit next month…”

The new narrative: “lack of tariff inflation is transitory”