VTI - Q1 Inflation Was A Speed Bump To New All-Time Highs

2024-05-16 10:22:19 ET

Summary

• April's Consumer Price Index aka CPI report shows a 0.3% increase in inflation, resulting in a decrease in the annualized rate from 3.5% to 3.4%.
• The core inflation index has been on a disinflationary trend, falling from 5.3% a year ago to a three-year low of 3.6% in April.
• Inflation is concentrated in the service sector, particularly in shelter costs, which should abate as real-time pricing is factored into the calculation.
• Yesterday's report reaffirms the disinflationary trend, which is why we are at new all-time highs for the major market averages.

After three monthly inflation reports that came in hotter than expected during the first quarter, due largely to seasonality and components of the index that lag, the disinflation in the monthly numbers that began in July 2022 resumed. Anticipating yesterday’s Consumer Price Index ("CPI") report for April, investors have been driving the major market averages to new all-time highs, and they were not disappointed. The inflation gauge rose 0.3% for the month, which resulted in another decrease in the annualized rate from 3.5% to 3.4%. The core, which excludes food and energy, also rose 0.3% for the month, and the annualized rate fell from 3.8% to 3.6%....

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