Inflation Cools – Data Shows Signs of Disinflation
Through the ongoing aftermath of the regional banking crisis, the Federal Reserve has taken its side on which foe to prioritize first: inflation. For the month of April, the consumer price index, a metric that tracks changes in prices of consumer goods and services, roughly hit its previously forecasted increases. When compared to the previous month, inflation grew by around 0.37%, a small spike when compared to March’s month-over-month growth of 0.1%. Inflation is, however, generally viewed on a year-over-year basis, with the CPI cooling slightly more than anticipated. Compared to a year prior, consumer-side inflation rose 4.9%, lower than the expected 5% and the smallest increase in two years. The news of the decrease didn’t have the largest effect on markets, as prices are still much higher than the desired 2% and a large contributor was the slowed growth of the financial industry.
When breaking down the CPI to more basic levels, it is interesting to note exactly which consumer goods prices are falling. For instance, the stabilization of supply chains has allowed prices for groceries, labor, travel, and household energy to continue to fall on a straight-line basis. However, the largest price areas that rose in April were gasoline, used vehicles, and housing. Despite the few increases, the overall sentiment of investors sides with the idea that the Federal Reserve’s policy to higher borrowing costs has efficiently disinflated the economy, and a pause is expected during the next interest rate meeting on June 14th.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.