April CPI Numbers On Wednesday as Real World Prices Move Higher
What to say about backward-looking, understated CPI? The heavily massaged CPI for the month of April will be released Wednesday at 8:30am ET.
The price of oil ticked up during April, although it has bounced around in May.
The price of “Food at Home” and “Food Away from Home” continued to move higher in April (although I am not sure either category will be reported as such within the CPI calculation).
Surveyed rents are higher. This factors into CPI via the OER calculation.
In aggregate, price increases continued in April. Whether CPI reflects this reality is a different story.
In addition, the Fed increased its Balance Sheet position last week and has probably started its easing campaign. The Fed’s easing campaign will first manifest itself on the QT/QE side before it lowers its Fed Funds rate.
I believe that price increases will finally start to abate once the unemployment rate ticks up above 4%. If unemployment hits 4% and climbs higher, investor sentiment will change to the negative. April was a big month for layoffs as companies saw the economy slow. Let’s see how those layoffs are reported in the initial and revised jobs numbers. The Federal Government has heavily massaged the jobs numbers for many months now. The initial reported jobs numbers are almost always inflated.