In case you missed it: US April CPI 3.8% y/y vs 3.7% expected

It was no surprise that headline inflation got another bump up on the back of higher energy prices. However, core prices were also seen moving up as shelter prices in particular reaccelerated on the month. But even with that aside, there were higher price pressures in broader categories that also moved the needle up for core inflation.

So, what can we make of the latest US CPI snapshot? CIBC notes that:

“Price pressures were red-hot in the US in April, with the headline CPI rising by a 0.6% m/m pace as expected by the consensus. That reflected another lofty increase in gasoline prices and a pickup in food, which left the annual pace at 3.8%, up from 3.3% in the prior month. The first signs of passthrough from the oil shock into core elements were on display, with the ex food/energy measure rising by 0.4% m/m (vs 0.3% expected), with airfares up strongly, while some tariff-exposed categories including apparel added to the upside, leaving the annual pace at 2.8%.

This data only includes the first signs of broader spillover from the oil price shock into core components, and annual inflation is set to move higher in May, which will leave the Fed on the sidelines until there are signs of oil prices heading sustainably lower.”

Their call fits with market pricing at the moment, with no rate changes expected until by year-end. Even as oil prices continue to ramp up and we’re seeing that seep into inflation pressures, market players are still not all too convinced that the Fed has to pivot towards rate hikes just yet.

As for CIBC’s call, it fits with their forecast that the Fed is unlikely to move until either inflation falls firmly towards the 2% threshold or unemployment approaches the 5% mark.