Steadier Inflation: May 8 – 12

Price measures appear to be finding their floor. Here are the five things we learned from U.S. economic data released during the week ending May 12.


Consumer prices continued to rise in April. The Consumer Price Index (CPI) jumped a seasonally adjusted 0.4 percent, up from March’s 0.1 percent advance but matching that of February. CPI has risen 4.9 percent over the past year, the smallest 12-month comparable for the Bureau of Labor Statistics measure in two years. Energy CPI increased for the first time since January (+0.6 percent versus March, gasoline: +27 percent) and food CPI held steady for a second consecutive month. Net of both, core CPI rose 0.4 percent, its fifth consecutive month of gains of at least that magnitude. Core CPI has risen 5.5 percent over the past year. Rising were prices for used cars/trucks (+4.4 percent), medical care commodities (+0.5 percent), shelter (+0.4 percent), and apparel (+0.3 percent). Prices fell for new vehicles (-0.2 percent), transportation services (-0.2 percent), and medical care services (-0.1 percent). 

Wholesale prices grew modestly in April. The Bureau of Labor Statistics’ Producer Price Index (PPI) for final demand increased at a seasonally adjusted 0.2 percent after falling 0.4 percent in March. The core PPI measure (which removes food, energy, and trade services) and that for wholesale goods each grew 0.2 percent. Energy PPI bloomed 0.8 percent, while food measure declined 0.5 percent. Services PPI advanced 0.3 percent, fueled by a 0.5 percent jump for trade services PPI (which measures retailers and wholesaler margins). Over the past year, PPI has increased 2.3 percent (its smallest gain since January 2021) and the core measure was up 3.4 percent. 

Consumers grew more pessimistic in early May. The University of Michigan’s Index of Consumer Sentiment plummeted by 5.8 points to a seasonally adjusted 57.7 (1966Q1=100). This was the index’s lowest reading since last November and left the measure 7/10ths of a point below its year-ago mark. The current conditions index fell by 3.7 points to 64.5 (May 2022: 63.3), while the expectations index declined by 7.1 points to 53.4 (May 2022: 53.4). The press release notes that consumers’ dour outlook would “exacerbate the dire economic consequences” of the federal government defaulting on its debt. One-year inflation expectations were at 4.5 percent, off 1/10th of a percentage point in April. 

Small business owners were not particularly optimistic either. The Small Business Optimism from the National Federation of Independent Business lost 1.1 points in April to a seasonally adjusted 89.0 (1986=100). The index has remained below its historical average of 98 for 16 consecutive months. Six of ten index measures declined during the month, including those for current inventories, earnings trends, and expected sales. The other four measures improved in April, including plans for increasing employment and current job openings. The press release noted that “inflation remains a top concern for small businesses.” 

Wholesale inventories held steady in March. The Census Bureau estimates merchant wholesaler inventories were at $918.5 billion, matching February but 9.1 percent below that of a year earlier. Durable goods inventories were at $560.7 billion (unchanged from February), while nondurables shrank 0.2 percent to $357.8 billion. Wholesaler sales plummeted 2.3 percent in March to $655.3 billion. Sales were off 2.9 percent from a year earlier. Durable goods sales slumped 2.3 percent and those for nondurables dropped 1.9 percent. The resulting inventories-to-sales (I/S) ratio of 1.40 was up three basis points for the month and 15 basis points from March 2022. The I/S ratios for durables and nondurables were 1.83 and 1.03, respectively. 

Other U.S. economic data released over the past week:

  • Jobless Claims (Week ending May 6, 2023, First-Time Claims, seasonally adjusted): 264,000, +22,000 vs. the previous week, +22,000 vs. the same week a year earlier). 4-week moving average: 245,250 (+15.1% vs. the same week a year earlier). 
  • Import Prices (April 2023, All Imports, not seasonally adjusted): +0.4% vs. March 2023; -4.8% vs. April 2022. Nonfuel Imports: Unchanged vs. March 2023; -1.9% vs. April 2022. 
  • Export Prices (April 2023, All Exports, not seasonally adjusted): +0.2% vs. March 2023; -5.9% vs. April 2022. Nonagricultural Exports: +0.2% vs. March 2023; -6.3% vs. April 2022. 
  • Senior Loan Officer Opinion Survey

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

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