Daily Digest

Debt & Equity Finance

Inflation rate slows in April, CPI shows, but prices pressures still haven’t gone away

May 20, 2024

VOLUME 200

In April, consumer prices increased by 0.3%, driven primarily by higher oil prices and housing costs, though this was below the 0.4% increase economists had anticipated. The core inflation rate, which excludes food and energy, also rose by 0.3%—the smallest rise in four months.

Over the past year, inflation increased at a rate of 3.4%, a slight decrease from the previous month’s 3.5%. The core CPI rose 3.6% year-over-year, the lowest since April 2021. Despite these decreases, interest rate reductions are unlikely until later in the year.

Consumer Price Index

Consumer Price Index Graph

Source: Market Watch

Retail sales stagnate as inflation and interest rates curb spending

Elevated inflation and high interest rates are beginning to take their toll on consumers.

Retail sales remained unchanged from March and fell short of economists’ forecasts after a revised increase of 0.6% in March. When excluding gas and auto sales, retail sales dropped by 0.1%.

According to Michael Pearce, deputy chief U.S. economist at Capital Economics, retail sales were further impacted by a 1.2% decrease in online business, which he attributed to a new sales event at Amazon and the earlier occurrence of Easter this year.

Source: AP

Manufacturing slips due to pullback in auto production

Manufacturing output dipped 0.3% in April, the first decline since January, when winter storms weighed heavily on factory activity.

One industry that stood out for its weakness in April was motor vehicle and parts, where production fell 2% after rising more than 2% in the prior two months.

Nevertheless, motor vehicle assemblies are still hovering above their 2019 average, underscoring that earlier disruptions from severe winter weather, the United Auto Workers union strike, and the pandemic are firmly in the rearview mirror.

Source: Oxford Economics

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