Wednesday, May 14, 2008

Consumer Inflation Decelerates

- The Consumer Price Index for April rose .2% versus estimates of a .3% rise and a .3% gain in March.

- The CPI Ex Food & Energy for April rose .1% versus estimates of a .2% increase and a .2% gain in March.

BOTTOM LINE: Consumer prices rose less than forecast in April, reflecting cheaper cars and lodging costs that offset rising food expenses, Bloomberg reported. The CPI rose 3.9% year-over-year in April versus a 4.0% gain in March. The core rate increased 2.3% year-over-year in April versus a 2.4% gain in March. Food prices rose .9% during the month. New vehicle prices fell .2% and airline fares dropped .5%. Hotel room prices fell 1.9%. The 10-year TIPS spread, a good gauge of inflation expectations, is 1 basis point higher on the report to 2.46%. This is still down 22 basis points from its March 13th high. The 10-year yield is unch. at 3.92% and the US Dollar Index is up another .11% on today’s news. The S&P Goldman Agriculture Commodity Spot Index is down another 1.1% today. It has now fallen 18.9% from its March 12th record high. I still believe inflation fears have peaked for the intermediate-term.

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