US: Further signs of disinflation appeared in April – UOB

Senior Economist at UOB Group Alvin Liew comments on the latest US inflation figures released on May 10.

Key Takeaways

“US headline consumer price index (CPI) increased by 0.4% m/m, 4.9% y/y in Apr (from 0.1% m/m, 5.0% y/y in Mar), the lowest headline reading, and the first below 5% inflation print since Apr 2021 (4.2%). However, core CPI (which excludes food and energy) proved to be stickier, as it rose sequentially at 0.4% m/m, (same as Mar), and compared to one year ago, it eased slightly to 5.5% y/y in Apr (from 5.6% in Mar).”

“US Inflation Outlook – For 2023, we still expect both headline and core inflation to ease to an average of 3.0%, and above the Fed’s 2% objective. Even as the shelter costs rose at a slower pace and food prices stayed flat for two months in a row, the latest CPI data showed that the balance of risk for US inflation remains far from being one-sided disinflation as reflected by surprise return of goods inflation and higher gasoline prices. Core and services inflation remain elevated (y/y) and rising (m/m), while the re-acceleration in Apr wage growth may still add to services cost pressure.”