After reaching some of the highest levels since the 1980’s, the CPI printed a hotter than expected +8.3% year-over-year figure for the month of April, higher than the +8.1% analyst consensus estimates but below the +8.5% YoY figure from March. This is still the second highest reading since 1982. The largest contributors to the surprise figure were shelter, food, airline fares, and new vehicle prices.
For comparison, the “Food at Home” index rose +10.8% over the last 12 months, the largest increase since November 1980. In addition, the “Meats, Poultry, Fish, and Eggs” index rose +14.3% over the last year, the largest such increase since May 1979. Finally, the “Airlines Fares” index rose sharply, increasing +18.6% in April alone, the largest monthly increase since the index began in 1963.
Lastly, and perhaps the most troubling when faced with all the above increases, is that US Real Average Weekly Earnings have now fell for the 13th straight month. Therefore, most Americans are experiencing the candle being burned at both ends – real income is not able to keep up with inflation and yet prices of basic goods continue to significantly rise. At some point, higher prices solve for higher prices, but when that point will be is anyone’s best guess.
Source: Bloomberg