Inflation Below Expectations
- Barry B
- May 18, 2024
- 1 min read
Over the past week, major economic data was weaker than expected. Inflation and consumer spending fell short of economists' forecasts, leading to slightly lower mortgage rates.
Inflation Data
The Consumer Price Index (CPI) rose 0.3% in April, below the forecasted 0.4%, and is now 3.4% higher than a year ago. Core CPI, which excludes food and energy, increased by 3.6% over the past year, down from 3.8% last month. This marks the lowest annual rate since April 2021.
Core CPI and Federal Reserve's Target
While core CPI has dropped from its peak of 6.6% in September 2022, it remains well above the Federal Reserve’s target of 2%. Housing costs continue to be a major factor in the rise, along with increases in apparel, transportation services, and medical care. However, used and new vehicle prices saw declines in April.
Consumer Spending
Despite higher prices and borrowing rates, consumer spending has remained high due to a strong labor market. Recent data, however, shows some weakening. Retail sales were flat in April, missing the expected 0.4% increase, with revisions for the previous month showing lower results. Declines were noted in online merchants, sporting goods stores, and vehicle dealers.
Economic Outlook
Following this inflation data, investors see September as the likely time for the Federal Reserve to consider its first rate cut since 2020.
We will continue to keep you updated on these and other economic developments.