The CPI headline print of 0.3% for April came just as expected, rising from 0.2% in March and the highest sequential increase since June of 2013. It was also in line with expectations. The CPI ex-food and energy rose 0.2% and up 1.8% from a year ago, both just modestly higher than expected.
The breakdown shows why April inflation wasn't even higher: energy service prices tumbled by -1.9% driven by a 2.6% drop in the price of electricity. On the other hand food prices refused to decline in line with what the PPI disclosed yesterday.
However, when drilling down into the food prices we find the following reveleation:
The food index rose 0.4 percent in April. The index for food at home, which rose 0.5 percent in both February and March, increased 0.4 percent in April. The index for meats, poultry, fish, and eggs rose 1.5 percent in April and has increased 3.9 percent over the last three months. The index for meats rose 2.9 percent, its largest increase since November 2003. The index for fruits and vegetables also continued to rise, increasing 0.7 percent. The dairy index also rose in April; its 0.5 percent advance was its sixth increase in a row. In contrast to these increases, the index for other food at home declined 0.2 percent, and the nonalcoholic beverages index declined for the fourth month in a row, falling 0.1 percent. The index for cereals and bakery products was unchanged in April. The food at home index has risen 1.7 percent over the past 12 months, with the index for meats, poultry, fish, and eggs up 6.4 percent over the span, the largest increase among the major grocery store food groups. The index for food away from home rose 0.3 percent in April, the third straight such increase, and has increased 2.2 percent over the last 12 months.
How about other hedonically-adjusted prices?
The index for all items less food and energy increased 0.2 percent in April, the same increase as in March. The shelter index, which rose 0.3 percent in March, increased 0.2 percent in April. The rent index increased 0.3 percent, the index for owners’ equivalent rent advanced 0.2 percent, and the index for lodging away from home rose 0.4 percent. The medical care index rose 0.3 percent in April, with the indexes for medical care services and medical care commodities both increasing 0.3 percent. The index for airline fares rose sharply in April, increasing 2.6 percent, its largest increase since November 2009. The new vehicles index increased 0.3 percent in April, and the index for used cars and trucks rose 0.5 percent. The recreation index, which declined in March, rose 0.2 percent in April. The tobacco index rose 0.1 percent, the same increase as in March. The indexes for apparel, for household furnishings and operations, and for personal care were all unchanged in April. The index for all items less food and energy has risen 1.8 percent over the last 12 months. This figure has remained in the range of 1.6 percent to 1.8 percent for 13 months in a row. The shelter index has increased 2.8 percent over the last 12 months; this figure has been trending upward. The medical care index has risen 2.4 percent over the span. The new vehicles index has risen 0.4 percent, while the index for used cars and trucks has advanced 0.2 percent.
And since US consumer disposable income is lower than most of these annual increases, it is increasingly becoming clear that aside from meat, airline travel, shelter and medical care, which are getting ever more unaffordable, US households have never been able to buy as many LCD TVs as they can now.