Core consumer price index rose “only” 0.3% month-on-month in April

Inflation isn’t exactly looking good for the US in the first period of 2024, but it did provide some respite this Wednesday. The core consumer price index (CPI) (excluding energy and food, which are always more volatile) was in line with analysts’ forecasts and rose 0.3% month-on-month in April. The data comes after three consecutive readings (from January to March) of 0.4%, which again raised alarm bells and ended the positive disinflation path recorded in 2023. While the data doesn’t allow the scenario to get worse, it’s not like it’s a deal-breaker for the Federal Reserve, which has seen its interest rate cut schedule become more difficult this year.

Evidence of how disinflation was slowed down is annual readings. Although they have adjusted to economists’ expectations, 3.4% of total CPI (one tenth less than in March) and 3.6% of the base amount (a two-tenths drop and the lowest in three years) are still far from the Fed’s 2% target.

“The Federal Reserve needs inflation to keep living place and inflation servicesAll in all, pick up the disinflationary baton of goods so that the main figures are constantly reduced towards the Fed target. Commodity inflation is already at pre-pandemic levels, so this component has little scope for further leadership,” explains Felipe Villarroel, manager of TwentyFourAM (Vontobel boutique).

Inflation living place, continues the analyst, is associated with several factors and most of them contributed to the growth of rental rates. The most important thing was the recovery in residential property prices, but this is also worth mentioning; high interest rates making it difficult to buy, a depressed construction market and stricter lending standards from the banking sector. Some of these factors show more encouraging trends, such as a recovery in existing home sales and a slight improvement in lending standards. But, on the other hand, housing prices are rising again.

Regarding inflation in servicesexcluding housing, Villarroel concludes, one of the main drivers is wage inflation: “Service companies typically derive most of their costs from wages, and therefore it is difficult to significantly improve this component unless wage inflation comes down. last two readings Although these numbers are not yet sufficient to qualify as a trend, the data is encouraging.