Here are the key takeaways from the US CPI report for April released Wednesday:
- The consumer price index rose 0.3% in April from March, slightly less than forecast, while core CPI, which excludes food and energy, was in line with the median estimate, 0.3%. That marks the smallest monthly core CPI gain so far this year. The annual core CPI gain was 3.6%, the smallest in three years.
- Housing costs remain the biggest component of inflation, while motor-vehicle insurance continues to climb at the fastest annual pace since 1976. Medical care also rose. Used vehicle prices dropped, along with airfares and household furnishings.
- Retail sales came in weaker than expected for April, with the headline figure unchanged on the month. The “control group” figure, which feeds into GDP, was down 0.3%, with March also revised lower. The report suggested a loss of momentum in consumer spending at the start of the second quarter.
- Economists said the softer data argued in favor of interest-rate cuts by the Federal Reserve later this year. Interest-rate futures signaled increasing confidence in two reductions by the end of 2024.
- Treasuries and stock futures climbed in reaction to the numbers, while the dollar dropped. Two-year Treasury yields were down about 7 basis points as of 9:20 a.m. in New York, after being down about 4 basis points ahead of the releases. S&P 500 futures were up 0.5%, suggesting stocks may notch a new high on Wednesday.
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