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Peter Earle: AIER Everyday Price Index Rises for Fifth Consecutive Month



The AIER Everyday Price Index rose for a fifth consecutive month in April 2024. The 0.59 percent increase brings our proprietary inflation measure to 290.9.

AIER Everyday Price Index vs. US Consumer Price Index (NSA, 1987 = 100)


(Source: Bloomberg Finance, LP)

In April 2024, fourteen constituents of the Everyday Price Index rose in price, with the largest increases taking place in motor fuel, food away from home, and personal care services. In nine categories prices declined, the largest of those coming in fuels and utilities, domestic services, and pet and pet products.

The US Bureau of Labor Statistics (BLS) released Consumer Price Index (CPI) data for April 2024 on May 15, 2024. The month-over-month headline came in 0.1 percent less than the 0.4 percent expected. Meanwhile, core month-over-month was in line with forecasts (0.3 percent), as were both the year-over-year headline (3.4 percent) and year-over-year core (3.6 percent) readings.

In April 2024, the month-over-month headline categories were mixed. The overall food index remained unchanged, following a slight increase of 0.1 percent in March. Within this category, the index for food at home decreased by 0.2 percent, with declines observed in meats, poultry, fish, and eggs (a notable 7.3-percent drop in egg prices), fruits and vegetables (down 0.8 percent), and nonalcoholic beverages (down 0.2 percent). Conversely, the indices for cereals and bakery products rose by 0.6 percent, other food at home and dairy products each increased by 0.1 percent, and food away from home saw a 0.3 percent increase, consistent with the previous month, driven by rises in both limited and full-service meals.

Also among April headline categories the energy index experienced a 1.1 percent increase, mirroring the rise from March, with the gasoline index climbing 2.8 percent (5.2 percent before seasonal adjustments) and the fuel oil index up by 0.9 percent. The index for natural gas saw a significant decrease of 2.9 percent, and the electricity index slightly dropped by 0.1 percent during the same period.

In the core categories, from March to April 2024 the shelter index saw a 0.4 percent increase, which made it the primary contributor to the monthly rise in the index; similar increases occurred in both the rent and owners' equivalent rent categories. Despite a slight 0.2 percent decrease in the lodging away from home index after a minor rise in March, other sectors showed continued price increases. The motor vehicle insurance index climbed 1.8 percent, and apparel prices rose by 1.2 percent. Increases were also observed in the indexes for personal care, recreation, and education. Additionally, medical care indices continued to climb, with hospital services increasing by 0.6 percent, physicians' services by 0.1 percent, and prescription drugs by 0.2 percent. Conversely, the index for used cars and trucks declined by 1.4 percent, continuing a downward trend from the previous month, and household furnishings and operations fell by 0.5 percent.

April 2024 US CPI headline and core month-over-month (2014 – present)


(Source: Bloomberg Finance, LP)

In the 12 months from April 2023 to April 2024, headline CPI rose 3.4 percent and core CPI rose 3.6 percent, both of which were consistent with surveys.

In headline categories year-over-year, the index for food away from home increased by 4.1 percent, with limited service meals rising by 4.8 percent and full service meals by 3.4 percent. The energy index saw a 2.6 percent rise, made up of a 1.2 percent increase in the gasoline index and an unexpected 5.1 percent jump in the electricity index. The natural gas index over the previous 12 months by 1.9 percent, as did the fuel oil index (down 0.8 percent over the same period).

In core categories over the past year, the index for all items excluding food and energy rose by 3.6 percent, with the shelter index showing an increase of 5.5 percent. The latter accounts for over two-thirds of the total increase. Other notable rises occurred in the categories of motor vehicle insurance index (up 22.6 percent), medical care (up 2.6 percent), personal care (up 3.7 percent), and recreation (up 1.5 percent).

April 2024 US CPI headline & core year-over-year (2014 – present)


(Source: Bloomberg Finance, LP)

April's core CPI data represents the lowest of 2024 and may signal the resumption of disinflation, particularly where shelter costs are concerned. Despite some favorable signs, though, there remains a persistent inflationary pressure in certain categories. The slight decrease in headline CPI from 0.38 percent to 0.31 percent, with a year-over-year moderation to 3.4 percent, coupled with a more pronounced slowdown in core from 0.36 percent to 0.29 percent, supports cautious optimism regarding the inflation fight. Core CPI on a one-, three-, and six-month annualized basis indicates sustained inflation momentum, which is a key metric for Federal Reserve officials assessing the inflation landscape.

The April 14th Producer Price Index (PPI) data release suggests that the core Personal Consumption Expenditures (PCE) Price Index, due at the end of the month, will reflect the same trend.

On the other hand, energy contributed an additional 0.08 percent to headline CPI, with a steady monthly increase of 1.1 percent as seen in March. Food prices remained stable as decreases in meat and fruit prices balanced out rising costs for food away from home. Core goods prices dropped slightly, led by a decline in used and new car prices, suggesting potential for ongoing disinflation driven by the automotive sector. Meanwhile, core services inflation fell from 0.5 percent to 0.4 percent largely due to the easing growth in primary rents.

But despite these trends suggesting tamer inflationary pressures, certain areas like car insurance and recreation services still exhibit rising costs, which underscores the shifting nature of the current inflationary landscape. Nevertheless, should the April CPI data be followed by signs that disinflation is resuming in the coming months, they – combined with growing indications of softening labor market conditions and declining consumption – are likely to bring rate cuts back into focus for the Federal Reserve.

Peter C. Earle, Ph.D, is a Senior Research Fellow who joined AIER in 2018. He holds a Ph.D in Economics from l'Universite d'Angers, an MA in Applied Economics from American University, an MBA (Finance), and a BS in Engineering from the United States Military Academy at West Point.

Prior to joining AIER, Dr. Earle spent over 20 years as a trader and analyst at a number of securities firms and hedge funds in the New York metropolitan area as well as engaging in extensive consulting within the cryptocurrency and gaming sectors. His research focuses on financial markets, monetary policy, macroeconomic forecasting, and problems in economic measurement. He has been quoted by the Wall Street Journal, the Financial Times, Barron's, Bloomberg, Reuters, CNBC, Grant's Interest Rate Observer, NPR, and in numerous other media outlets and publications.


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Posted: May 15, 2024 Wednesday 03:14 PM