The BLS released their Consumer Price Index report for April today and despite a 500 basis point increase in the central bank rate we still have 5 percent inflation.
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in April on a seasonally adjusted basis, after increasing 0.1 percent in March, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 4.9 percent before seasonal adjustment. The index for shelter was the largest contributor to the monthly all items increase, followed by increases in the index for used cars and trucks and the index for gasoline. The increase in the gasoline index more than offset declines in other energy component indexes, and the energy index rose 0.6 percent in April. The food index was unchanged in April, as it was in March. The index for food at home fell 0.2 percent over the month while the index for food away from home rose 0.4 percent. The index for all items less food and energy rose 0.4 percent in April, as it did in March. Indexes which increased in April include shelter, used cars and trucks, motor vehicle insurance, recreation, household furnishings and operations, and personal care. The index for airline fares and the index for new vehicles were among those that decreased over the month. The all items index increased 4.9 percent for the 12 months ending April; this was the smallest 12-month increase since the period ending April 2021. The all items less food and energy index rose 5.5 percent over the last 12 months. The energy index decreased 5.1 percent for the 12 months ending April, and the food index increased 7.7 percent over the last year.
The bolded text are what we consider important information. Overall inflation is 4.9 percent year over year however core inflation which is largely based on services instead of goods is 5.5 percent year over year. And most importantly of all is that food inflation is at 7.7 percent over the last year – YIKES!
Also note in the chart that energy has a -12 percent decline however we are entering peak energy use consumption as the summer kicks off and people turn on their air conditioner and take vacations by driving or flying so we expect energy prices to go up over the summer. Electricity is a scorcher with 8.4 percent increase year over year.
Where do we go from here? Inflation will continue to remain high and perhaps go higher over the summer but long term, we will have a labor shortage as 40+ million boomers retire over the next 7 years and beyond.
The best thing to do now is stay tuned, stay profitable and stay solvent…