Inflation Ticks Down for 10th Month in a Row

From Retail Leader, May 10:

• Inflation has cooled for the 10th month in a row. 
• The Consumer Price Index (CPI) rose 0.4% in April, and the CPI for the past 12 months sits at 4.9%. 
• Food costs in April were flat compared to March, as they were in February. 

Inflation continued to decline in April for the 10th month in a row, showing more promising signs for consumers following months of continued economic pressures. 

According to the Bureau of Labor Statistics (BLS), the Consumer Price Index (CPI) rose 0.4% in April, up slightly from last month when it was basically flat at a 0.1% increase. Overall, the CPI for the past 12 months sits at 4.9%, roughly on par with analysts’ predictions. While inflation still poses burdens on consumers, it has continued to decline since it hit its peak at about 9% last June.

Overall, food costs in April were flat compared to March, just as they had been compared to February, according to the BLS data. Inflation for food at-home declined by 0.2% from March, while food away from home rose by 0.4%. 

Broken down by category, the food indexes for: 

• fruits and vegetables decreased by 0.5%. 
• meats, poultry, fish and eggs fell  0.3%.
• dairy and related products dipped 0.7%, the largest decline since 2015.
• non-alcohol beverages posted relatively flat with a 0.1% decline. 

“One of the largest positives is the slowdown in inflation for food-at-home, including some of the key grocery categories,” said Elizabeth Lafontaine, chief retail analyst for Retail Leader Pro. “However, for consumers overall, the continued increase in inflation for shelter is still worrisome as large expenses for consumers continue to climb.”

The largest month-over-month (MoM) decrease in April was in piped gas service, where the CPI declined by 4.9%. Overall, energy services, which include electricity, declined by 4.5%. The largest MoM increase was in used cars and trucks, where the CPI increased by 4.4%. New vehicle costs, meanwhile, decreased by 0.2%. 

Even though cooling inflation represents positive news for consumers, they’re still unlikely to see immediate relief. It’s also unlikely to represent immediate relief for retailers, as consumer perceptions around price and the economy developed during the last year or so are likely to persist even while conditions improve.

The Federal Reserve has responded to continued inflation by hiking interest rates, most recently raising them by 0.25%, though it this month signaled continued hikes could finally cease. Fed Chair Jerome Powell told reporters this month that economic conditions — including the recent failure of three major banks — “may not be far off, or possibly even at” a level where it would end rate hikes.