–April CPI -0.1%; Core Rate Unchanged
–Yr/Yr Change in Core Rate +0.9%, Lowest Since January 1966

By Denny Gulino

WASHINGTON (MNI) – April’s CPI came in below expectations on all
counts, with the core rate unchanged, as the heavily weighted measures
of rents — also unchanged — kept the inflation rate in a deep freeze
for the most part.

The Bureau of Labor Statistics Wednesday reported the overall April
CPI lost a tenth after seasonal adjustment, and climbed two tenths
before adjustment. Had the month’s net decline in energy been
excluded, the CPI’s broadest measure would still have been up only a
tenth.

The April core rate was flat both before and after adjustment.

The CPI’s energy index dropped 1.4% in April led by the 2.4%
decline in gasoline and 4.4% for natural gas, but overall is still up
18.5% for 12 months.

The three-month annualized change for the CPI is zero and the
year-to-date change is just up 0.5%. At the same point last year it was
2.1%. The four-month annualized change for the core rate is zero and was
2.5% at this point last year.

“We’ve really had several months in a row of what might be termed
undramatic changes,” BLS senior analyst Steve Reed told Market News
International in an interview before the report was published. “Shelter
being flat, it pulls the ‘all-items’ and the core toward zero.”

The overall shelter category, which alone makes up 32.3% of the CPI
and more of the core rate, showed no change, as did its main components,
the BLS measures of the cost of rents.

“Rents, at this point, are just extremely flat,” he continued. “As
far as the underlying cause most people would say its really comes from
the weakness of the economy. Housing has struggled and continues to
struggle and as that continues to happen, there’s not much upward
pressure.”

The biggest jump of any major category was April’s 2.2% increase in
airline fares, which Reed said was “pretty close to the only thing that
moved in a sharp way.” Yet he said the airline fares category is still
in a rebound phase, not having yet caught up to where it was in
2008 despite climbing 10.7% in the past 12 months.

Food prices went up 0.2% in April and despite “a little bit of an
upward trend in meat prices,” has been “unexciting,” he said, off 0.3%
for 12 months. In addition the shelter, apparel and recreation indexes
have also been negative year over year.

Auto prices for retail customers were also unchanged in April
though used vehicles showed a 0.2% gain for the month.

Household furnishing prices was another loser, off half a percent
in April.

Expectations in a Market News International survey centered on no
change in the overall April CPI and a 0.1% increase for the core rate.

** Market News International Washington Bureau: 202-371-2121 **

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