The
cost of everything feels too damn high, and now you have the numbers to
prove it: Surging energy prices drove inflation to a three-year high in
April, the Bureau of Labor Statistics reported yesterday, marking the first time since 2023 that the cost of living has outpaced average paycheck growth in the US. Top line: Annual wage growth slowed
to 3.6% last month, while year-over-year inflation hit 3.8%—up from
3.3% in March and 2.4% in February (before the US and Israel struck
Iran). In April: - More
than 40% of inflation’s month-to-month increase came from energy
prices, which were up ~18% from the same time last year. Prices at the
pump continued to rise, but at a slower rate than in March.
- Food
inflation also contributed, with the price of fresh produce—often
transported via diesel trucks—hitting its highest monthly increase since
2010. Tomato prices alone surged 15% for the second month in a row, in
part because of tariffs on Mexico.
Even without those volatile categories, core CPI still hit 2.8% last month, well above the Fed’s 2% goal. This was buoyed by higher airfares, streaming services like Netflix raising prices, and a one-time adjustment in rental costs stemming from the data blackout of last year’s government shutdown. “Inflation is eating up all wage gains,” a chief economist at Navy Federal Credit Union told CNBC. “This is a setback for middle-class and lower-income households and they know it.” In a recent CNN poll: - Nearly three-quarters of respondents said economic conditions are poor right now.
- “Uncertainty” and “stress” were the most common words Americans used to describe their financial futures.
Looking ahead…though
incoming Fed chair Kevin Warsh has generally called for lower interest
rates, the latest inflation data made traders more bullish on a rate hike by the end of the year.—ML |
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