US: Core CPI was a touch disappointing on auto weakness – Standard Chartered

US April CPI inflation printed moderately below market expectations, with core CPI rising 2.1% y/y and 0.98% m/m, points out Sonia Meskin, Research Analyst at Standard Chartered.

Key Quotes

“On balance, this was a benign print that points to ongoing firmness in US core inflation but few signs of significant acceleration in the months ahead. On the bright side, shelter prices remained strong, a positive sign for business investment as residential structures constitute the largest portion of US capital stock. Furthermore, medical service prices continued to accelerate. Medical services constitute a far larger part of the PCE index than of CPI, so ongoing price increases here bode well for the PCE trajectory, all else equal.”

“Among the weakest categories in April was airfare prices, which declined almost 3% m/m, and prices for used cars and trucks, down 1.6% m/m.”