The Inflation Report – April 2022

What you need to know:

• April inflation came in higher than expected with headline CPI MoM at +0.3% versus +0.2%. The year-over-year headline was 8.3% versus 8.1%, down from the prior month (8.5%).
• Core CPI also increased more than expected at +0.6% MoM versus +0.4% expected. YoY was 6.2% versus 6.0% forecasted but down from 6.5% in March.
• In the details, rents increased 0.6% and OER was higher at +0.5%. New car prices were higher by +1.1%, while used car prices fell -0.4%.
• A drop in energy prices limited the MoM gains but this relief should be short-lived as May gas prices hit new highs.
• The big rise in prices early last year dropped out. Base effects should push YoY inflation lower over the next few months.
• We believe April’s numbers shouldn’t deter the Fed from continuing to hike rates by 50bps at the next couple of meetings.