US inflation moderates to +3.4% year-on-year in April; core stands at +3.6%, three-year low

Inflacion USA

Banca March: US inflation is slowing down. The expected US CPI data came out in line with expectations and price growth moderated in April by one-tenth of a point to +3.4% year-on-year. In addition, the core rate – excluding the more volatile food and energy prices – also moderated by two tenths to +3.6%, its slowest growth rate in three years, supporting the view that inflation is gradually normalising. Turning to the evolution of the components, of note is energy which contributed 0.19 p.p. to headline inflation while food accounted for 0.3 p.p. Within the core rate, of note are the prices of goods which fell in April, this component being the one that most helped to curb inflation as both withdrew 0.28 p.p. On the other hand, the prices of services continue to be the main contributor to the price increase and alone contributed 3.15 p.p., in other words, they accounted for more than 90% of inflation.

Looking at the evolution of services prices, rents imputed to the owner continue to moderate slowly and in April these prices increased by +5.8% year-on-year, one tenth of a percentage point less than in the previous month and thus contributing 1.47 p.p. to inflation. On the side of “supercore” inflation (services prices excluding rental costs), a rate closely followed by the Fed, we once again had a negative figure as it rebounded to +4.9% year-on-year from +4.8% previously, which continues to show the higher inflationary pressures in services. Within this measure of inflation, car insurance and maintenance prices continue to push up service costs, with these two components accounting for 53% of super core inflation. Medical services costs also increased in the month, rising by +2.6% year-on-year (five tenths of a percentage point more than in the previous month) and accounting for another 14%. The third services component that most pushed up the price index was leisure services which contributed 0.5 p.p., although their growth is moderating (+4.1% year-on-year in April).

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