US CPI rose 0.2% month-on-month for both headline and core in April, below the 0.3% readings expected. This means headline inflation is down to 2.3% year-on-year from 2.4%, which is the lowest reading since February 2021, while core – ex food and energy – remains at 2.8% YoY.
The details show a third consecutive drop in airline fares (-2.8%MoM/-7.9%YoY) while used car prices fell 0.5% and apparel fell 0.2% and food prices fell 0.1% MoM. This offset strength in medical care services (+0.5%MoM) and medical care commodities (+0.4%) plus large increases in motor vehicle maintenance (+0.7%) and vehicle insurance (+0.6%).
The shelter components, which make up 35.4% of the inflation basket by weight also continue to run at elevated rates of 0.3%MoM/4.0%YoY, but the good news is that lead indicators, such as the Cleveland Fed’s new tenant rent series, are falling in YoY terms and suggests, based on the historical relationship, that housing costs will slow sharply late this year/early next.