U.S. consumer prices came in exactly as expected, up a modest 0.1% in April (3rd increase in a row) or 0.2% below a year ago, the fourth straight sub-zero reading. Excluding food & energy, prices were a little stronger, rising 0.3% in the month (consensus: 0.2%), the biggest monthly increase since 2008, or 1.8% above a year earlier.
Energy prices continue to limit the gains in prices, along with declining import prices. After falling in March, food prices were flat last month, but we will likely see higher prices hatched in coming months as the bird flu outbreak slashes egg supplies. Meantime, we're still seeing some upward pressure in rents (four months in a row of +0.3% readings), while medical costs jumped 0.7% (biggest monthly gain since 2007), primarily in hospital services (+1.9%).
"Looking at the near-term trend, headline and core CPI has been picking up (looking at the 3-month annualized rates), as well as over the past six months. This suggests that, although inflation remains very tame, economic growth (sporadic as it is, it seems) is helping prices stabilize instead of fall." notes BMO Capital Markets
