CPI in March rose .3% headline and .2% core, both in line with expectations but this cost of living index goes to a fresh record high. The y/o/y rise is 2.7% headline and 2.3% core. The core y/o/y gain matches the highest level since Sept ’08. The headline y/o/y rise is the slowest since Mar ’11. Energy prices were up .9% and food was up .2%. Owners Equivalent Rent, 24% of CPI, was up .2% m/o/m and 2% y/o/y. Apparel prices rose by .5% and are up 4.9% y/o/y. Vehicle prices were up led by a 1.3% m/o/m jump in used cars and trucks. Bottom line, with the FOMC still single handedly driving markets, inflation readings at this point in the cycle are becoming the most important to watch. Today’s number won’t change any opinion of the Fed but the 2.7% headline CPI gain, while moderating its gains from last year, still remains above the gains seen in average hourly earnings (2.1% in March). Regardless of what the rate of change in inflation is, if it’s still above the gains seen in income, the average person is falling behind.
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