Reference to the CFA’s Advocacy Update from May 12, 2022

US consumer prices rose by more than forecast in April, indicating inflation will persist at elevated levels for longer and keeping the Federal Reserve on the path of aggressive interest-rate hikes.

The core consumer price index, which excludes food and energy, increased 0.6 per cent from a month earlier and 6.2 per cent from April 2021, according to Labor Department data released Wednesday. The broader CPI rose 0.3 per cent from the prior month and 8.3 per cent on an annual basis, a slight cooling but still among the highest readings in decades.

Some of the largest contributors to the monthly increase included shelter, food, airfares and new vehicles.

The core CPI topped all estimates in a Bloomberg survey of economists, which had a median projection of 0.4 per cent. The headline gauge was seen climbing 0.2 per cent.

A key expectation for a moderation in inflation this year hinges on slowdown in goods prices as Americans shift their discretionary income to activities like travel and dining out. The rate of goods and other commodities inflation declined while services costs increased by the most since 2001 on a monthly basis. 

Food prices rose 0.9 per cent in April, and were up 9.4 per cent from a year earlier. The annual gain in food costs since 1981, including a record advance in prices for chicken, fresh seafood, baby food and prepared salads.

Energy costs declined in April, as gasoline prices fell 6.1 per cent from the prior month in what may prove to be just a temporary reprieve. Gas prices have since rebounded to a record high. 

Shelter costs — which are the biggest services’ component and make up about a third of the overall index — rose 0.5 per cent for a third straight month. Rent of primary residence climbed 0.6 per cent, while owners’ equivalent rent increased by the most since 2006. 

In another sign of soaring costs of household necessities, prices for energy services, which includes electricity and natural gas, were up 13.7 per cent from a year earlier in the biggest advance since 2008.

Driven by a pickup in travel plans, the cost of hotel stays rose 1.7 per cent while airfares surged a record 18.6 per cent as airlines passed along higher fuel costs to consumers. New-vehicle prices advanced 1.1 per cent, the most this year, while used-auto prices fell 0.4 per cent.