Aprils Inflation Surge wasnt as Drastic as it Looked

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There is probably less than meets the eye from the startling inflation pop in April, as goods impacted by a variety of temporary influences pushed core price increases at the quickest pace since the Reagan presidency. Headline inflation rose by 4.2 from a year ago, while core prices excluding the volatile food and energy sectors got their biggest onemonth bump of 0.9 going back to 1981.

At the root of the increases were issues related to the pandemic, both in terms of how aggressive the current recovery is and how bad things were a year ago. There were factors such as supply chain congestion that added to the pressures. At the same time, an aggressively recovering economy pushed prices for airline tickets up 10.2 in April, hotels 8.8 higher and used car prices up 10.

While that was happening, the things that drive inflation over longer periods, like housing costs and the price of services, showed increases consistent with where theyve been over time. Shelter costs broadly increased 0.4 in April while services excluding energy rose 0.5. There is probably less than meets the eye from the startling inflation pop in April, as goods impacted by a variety of temporary influences pushed core price increases at the quickest pace since the Reagan presidency. Headline inflation rose by 4.2 from a year ago, while core prices excluding the volatile food and energy sectors got their biggest onemonth bump of 0.9 going back to 1981.

Source FXPro

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