April CPI: No major surprises
|Summary
The April CPI report was largely in line with forecasters' expectations. The 0.4% increase in both the headline and core CPI pointed to an inflation backdrop that is improving incrementally rather than rapidly. Falling prices at the grocery store and for energy services helped to offset an increase in gasoline prices in April, while an outsized jump in used auto prices was similarly tempered by declines in prices for travel related services such as airfares and lodging away from home. On balance, today's report does not materially change our outlook for inflation or Fed policy. We expect the FOMC to maintain the federal funds rate at its current level for the foreseeable future and for inflation to slow further in the months ahead as supply pressures continue to ease and demand growth weakens.
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