Headline CPI:
- CPI +2.4% vs +2.5% expected (some forecasts were 2.4%)
- Prior was +2.9%
- m/m reading at +0.1% vs +0.2% expected (unrounded consensus was +0.16%)
- Month-over-month unrounded +0.081% vs +0.221% prior
Core CPI:
- Core CPI +2.8% vs +2.9% expected
- Core CPI m/m +0.1% vs +0.2% expected (some forecasts were +0.27%)
- Core unrounded +0.130% vs +0.237% m/m prior
- Real weekly earnings +0.3% vs -0.1% prior
- Core goods prices +0.07% vs +0.06% prior
- Core services +0.2% vs +0.317% prior
- Core services ex shelter +0.2% vs +0.287% prior
- Core-CPI services ex-rent/OER +0.2% vs +0.373% prior
- Services ex energy +0.2% vs +0.317% prior
- Owners equivalent rent +0.3%
Prior to the report, the market was pricing in 67 bps in easing in the year ahead and 42 bps in easing through December. That’s quickly moved to 77 bps and 48 bps, respectively.
The US dollar is falling hard on this and S&P 500 futures are up 25 points.
A surprising quirk is that apparel prices fell 0.4% m/m despite the tariffs, which is hard to believe while the new vehicles index also fell 0.3%. Another source of downward pressure was airfares, which fell 2.7% and hotels at -0.1%.
On net, this is a near game-changer for inflation, though I’m sure the Fed will want to see how pricing develops over the summer and what happens after July 9 when Liberation Day tariffs are set to go back on (I’m guessing Trump punts).
This article was written by Adam Button at www.forexlive.com.
