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.
Not just supply crunch driven inflation. Services ex energy prices in April rose 0.7% from the prior month, a step up from 0.6% in March, 0.5% Feb
— Sara Eisen (@SaraEisen) May 11, 2022
Services inflation is more sticky than goods inflation. And it's accelerating. And it's not just being driven by rent and OER, it's broad. Fed waaaay behind the curve still. TD Securities charts. pic.twitter.com/fybGJFUw0W
— David Scutt (@Scutty) May 11, 2022
Shelter inflation also increased in April to 5.14% versus 5% in March. Rent inflation increased to 4.82% versus 4.44% in March.
– Shelter inflation +5.14% in April, up from 5.00% in March
— zerohedge (@zerohedge) May 11, 2022
– Rent inflation +4.82% in April, up from 4.44% in March
– Both highest since 1991. pic.twitter.com/PHc0ynNKl3
Food prices inflation also escalated from March levels to 10.8%, with notable increases for meats, poultry and eggs of 14.3%.
Food at home inflation jumps 10.8% in April vs 10% in March. Cereals and Bakery Products +10.3%. Meats, Poultry, Fish, and Eggs were +14.3% Dairy 9.1% Fruits and Vegetables +7.8% Nonalcoholic Beverages and Materials were +9.8%
— Sara Eisen (@SaraEisen) May 11, 2022
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.
This is the 2nd worst start to a year for the S&P 500 in history: -17.4% in the first 90 trading days. $SPX pic.twitter.com/tif178b7WG
— Charlie Bilello (@charliebilello) May 11, 2022