While the increase of 8.3% was lower than the March year-over-year increase of 8.5%, breaking down the data actually brings more concerns.
First, part of the decrease in April was due to lower gas prices last month, which have since then erased as prices at the pump reached new all-time highs.
Core inflation, the measure of inflation stripped of volatile components (food and energy) , increased by 0.6% in April month-over-month, doubling the March increase in core inflation of 0.3%.
This actually means that core inflation accelerated in April. Core inflation increase is more concerning because the price of volatile items such as energy and foods can more easily recover if the source of the inflation is tamed.
Core inflation however affects items and services for which prices are stickier. For instance, services sector inflation increased in April to a rate of 0.7%, a steady rise from 0.6% in March and 0.5% in February.
Shelter inflation also increased in April to 5.14% versus 5% in March. Rent inflation increased to 4.82% versus 4.44% in March.
Food prices inflation also escalated from March levels to 10.8%, with notable increases for meats, poultry and eggs of 14.3%.
In tandem with the rising inflation and the Federal Reserve’s intentions to increase its policy rate to curb the price increases, financial markets have been up to one of their worst starts in history.