Daily Market Color

US Core CPI Drops 0.4% in April

Consumer prices experience largest monthly drop since 2008. This morning the US Labor Department reported that April CPI fell 0.8%, the biggest decline since the 2008 financial crisis. Falling gas prices led the decline as crude plunged 21% last month, largely due to the 1) price war between Saudi Arabia and Russia and 2) pandemic-induced demand shock. The airline industry also continues to suffer, with the report revealing a 15% drop in passenger fares. Y/Y core CPI growth (excluding food and energy) slowed to +1.4% from 2.1% in March. Acknowledging the potential for inflation to be tempered for an extended period of time, yesterday Atlanta Fed President Raphael Bostic commented, “Inflation should come one day but I am not expecting that day to come in the next 6-12 months, as we haven’t hit our 2% target yet.”

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