Latest CPI - better than expected (12Apr2023)

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 The latest CPI figure as of 12 Apr 2023 ~ reported by BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1% in March on a seasonally adjusted basis, after increasing 0.4% in February, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 5.0% before seasonal adjustment.

 


Observations (based on 12 months ended March 2023):

  • Food inflation remains strong at 8.5%
  • Energy dropped 6.4% though energy services like Electricity and Utility (piped) gas services remain elevated at 9.2%
  • Commodities less food & energy commodities fell to 1.5%
  • Services less energy services (like Shelter, Transportation services) remain elevated at 7.1%.
  • Lead the inflation is transportation services at 13.9%
  • The biggest decline is gasoline (all types) at -17.4%

This is one of the biggest drops of YoY inflation in recent times ~ from 6.0% in Feb 2023 to 5.0% in Mar 2023≥

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US Retail Gas Price

As per the chart above, there is a trend of increasing US retail gas prices since late Feb 2023. Will the rising gas prices show up in the coming months?


Based on the CPI data, the YoY inflation came in weaker and this implies that the Fed may take a less hawkish approach for the coming interest rate hike in early May 2023. Futures of S&P 500, Dow Jones and NASDAQ have risen during pre-market following the CPI news.


This should be good news for the market as we enter the earnings season.

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