US April CPI: A a stark reminder that the Fed has a long road ahead – Wells Fargo
11.05.2022, 15:54

US April CPI: A a stark reminder that the Fed has a long road ahead – Wells Fargo

The key report of the week was released on Wednesday. The annual inflation rate in the US dropped in April to 8.3% from the March 8.5% reading (41-year high). The increase was larger than expected. Analysts at Wells Fargo point out April's CPI data served as a stark reminder that the Federal Reserva has a long road ahead of it in bringing down inflation.

Key Quotes: 

“The onslaught of inflation this past year eased somewhat in April with the Consumer Price Index posting its smallest gain in nine months. Prices rose 0.3% over the month compared to consensus expectations for a 0.2% rise. Yet even accounting for the moderation, prices continue to rise at a formidable pace. While the year-over-year rate of CPI inflation slowed for the first time since August, prices are still up 8.3%—a rate unthinkable a year ago.”

“Core inflation rose 0.6% in April, hotter than even our above-consensus call for a 0.5% increase and a pickup from last month's 0.3% rise. After slipping in March, core goods prices rose 0.2% in April. The resilience of core goods prices can be tied to a more modest drop in used vehicles and a 1.1% jump in new vehicles as the BLS incorporated new source data with today's release.”

“Although base effects are starting to help drive the year-over-year rates of inflation lower, that will no longer be the case come mid-summer. With the underlying trend in inflation still well-above what the Fed considers desirable, another 50 bps rate hike at the June 14-15 FOMC meeting seems all but assured, with further hikes of that magnitude highly likely to follow in our view.”

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