Inflation Spikes in April

At Lighthouse Wealth Partners, we prioritize ongoing communication and take pride in delivering timely updates and meaningful insights to help guide your investment decisions. While the S&P continues to sustain April's momentum (record close of 7,501.24 yesterday), data from this week confirmed that consumers are confronting higher prices - even beyond the pump. 

On 05/14, the BLS (U.S. Bureau of Labor Statistics) released its report on April's headline and core inflation. While headline inflation was expected to look ugly this month (given how much gas and fuel prices have surged), the faster-than-expected acceleration in core inflation suggests the price increases are not simply limited to energy. Our focus this week provides greater insights into May 14th's CPI data release and inflation reporting.

Key Summary Takeaways from April's Report

• Headline CPI climbed 0.6% from a month before, while the core gauge (excluding food and energy costs) rose 0.4%. It should be noted that the hotter readings were anticipated by economists as we begin to see more of the global impact of higher energy prices resulting from the Iran War and the Strait of Hormuz.
• On a year-over-year basis, the CPI jumped 3.8%, a pace that outstripped workers’ earnings for the first time in three years and marked the highest inflation print since May of 2023. The core CPI was up 2.8%, the most since September.
• Core inflation was affected by a statistical quirk tied to housing costs, which climbed the most since 2024. As a result of the government shutdown late last year, data on housing was not collected under normal circumstances, leaving statisticians to record a flat reading that ended up inflating rent and housing costs for April.
• Energy prices jumped 3.8% on the month, after a 10.9% March surge. Gasoline was up 5.4%. Airfares climbed 2.8% on a monthly basis and some 20.7% on an annual basis. A number of economists cautioned against dismissing the inflationary elements of the report, given risks of higher headline costs feeding through to inflation expectations.

Higher Prices Emerge Beyond the Pump

April's CPI data reflects that consumers are currently trapped in a "double squeeze" and wrestling with both higher gasoline prices and a spike in food prices. Gas prices have soared about 50% since the war began on February 28th and are up 28.4% over the year, according to CPI data. Consumers paid a national average of $4.50 per gallon as of Tuesday's data release, according to AAA - up from about $3.14 a year ago. 

As the conflict in Iran persists, the oil shock has put upward pressure on food prices, with pressure extending beyond the pump. Food prices increased 3.2% over the last year, according to the CPI data. For example, beef prices rose 14.8% year-over-year according to the most recent data. Families are confronting higher prices when considering the cost of a gallon of unleaded gas and a pound of ground beef.