April US CPI review: give it another couple of months

While April's CPI report didn't see much change in the annual rate of inflation, that is likely to change dramatically by June, with major disinflation likely to be imminent.

Executive summary

• Headline CPI’s YoY growth rate fell to 4.9% in April, from 5.0% in March (vs my 5.0% forecast, consensus 5.0%)

• Core CPI’s YoY growth rate fell to 5.5% in April, from 5.6% in March (vs my 5.6% forecast, consensus 5.5%)

• Used car prices grew at a very strong MoM pace that was over and above the implied change in wholesale used car prices.

• New car prices also saw material MoM growth, but other nondurables prices saw a significant MoM decline.

• YoY food at home price growth continued to moderate — interestingly, the more lagging CPI food away from home category also saw MoM price moderation.

• As anticipated, the CPI’s rent based components saw a bounce back in their MoM growth rates, following an unusually large deceleration in March — the continued medium-term outlook is one of deceleration.

• Services prices saw some mixed signals — internet services prices fell, motor vehicle maintenance prices continued to rise at a more moderate pace, but other personal services saw record MoM …