The slow drip of inflation deceleration/Retail sales softer/Mfr'g still in recession

April CPI rose .3% both headline and core with the former one tenth less than expected and the latter as forecasted. Due to rounding though, the y/o/y gain of 3.4% was in line and vs 3.5% in March. The core rate y/o/y was higher by 3.6% vs 3.8% in the month before. The slow drip of inflation deceleration.

Energy prices rose 1.1% in April m/o/m after increasing by the same amount in March and by 2.3% in February and up 2.6% y/o/y. Food prices were flat in the month but up 2.2% y/o/y. Eating at home is still cheaper than eating out. Food at home prices fell .2% m/o/m and up 1.1% y/o/y. Going out to a full service restaurant is .3% more expensive compared to last month and by 3.4% y/o/y. For quick serve, prices are up .4% m/o/m and by 4.8% y/o/y. It’s no wonder that many restaurants are seeing slower traffic as many are responding to ever rising wages for their restaurant workers, particularly in California.

Services inflation ex energy rose .4% m/o/m and 5.3% y/o/y, remaining pretty persistent because of rents (still slow in reflecting on the ground reality) but also due healthcare and insurance among other things. Rents, for both owners equivalent and of primary residence, were up .4% m/o/m and 5.8% for the former y/o/y and 5.4% for the latter. Motor vehicle insurance prices jumped another 1.8% in the month of April after a 2.6% spike in March and higher by 22.6% y/o/y. Fixing your car saw no price change but only after it went up 1.7% in March and are still up 7.6% y/o/y. Medical care costs rose .4% m/o/m after a .5% rise in March and higher by 2.6% y/o/y. Health insurance prices were up .3% m/o/m after the sharp 1.2% increase in March. Hospital service prices were up .6% m/o/m and 7.9% y/o/y. Tenants/household insurance was down one tenth m/o/m but after rising by .5% in the month before and up by 4% y/o/y. Airline fares were down .8% m/o/m and by 5.8% y/o/y. Hotel prices fell by .3% m/o/m and .4% y/o/y.

On the goods side, core prices fell .1% m/o/m and are down 1.3% y/o/y and what is offsetting the services inflation. That is being helped by the 1.4% m/o/m and 6.9% y/o/y drop in used car prices. For new cars, prices fell for a 3^rd month, by .4% m/o/m and .4% y/o/y. Apparel prices though, as we all gear up for the warmer weather, rose 1.2% m/o/m, though up just 1.3% y/o/y. Prices for things around the home, driven by a 30 yr low in the rate of existing housing turnover, saw prices fall by .4% m/o/m and 2.8% y/o/y.