CPI: Details Show Continued Signs of Cooling

Bottom Line: Consumer prices rose as expected in April with higher gasoline prices but lower utility prices. Core CPI rose 0.41% on the month, just slightly faster than in March. Core commodity prices were mostly higher, while services prices, which have been the source of most of the trend price gains, slowed modestly. Used car prices rebounded sharply, consistent with a lag of two to three months between this report and the major used car price indices (which were higher earlier this year but fell in April). New car prices were lower, though, as were airfares after two months of sharp gains. Owner's Equivalent Rent (OER), the largest component of core, was up 0.54%, in line with March but notably lower than the 0.7% reading in February. Finally, prices for medical care services remained modest. Overall, this was slightly more encouraging than the headline suggested for Fed policymakers looking for a continued deceleration in inflation. While pockets of core price pressures remain, the "services less shelter" category, often cited by Fed Chair Powell, rebounded only slightly and remained firmly in a downtrend. And shelter prices are still on track to slowly deflate later this year, consistent with the long lag between actual rents and the imputed rent in CPI.