Monday Economic Report: Consumer Prices Cooled in April, but Core Inflation Rose Solidly

AICC, through its membership in the Council of Manufacturing Associations, is pleased to present the "Monday Economic Report" from the NATIONAL ASSOCIATION OF MANUFACTURERS (NAM).

By Chad Moutray, Ph.D., CBE – May 16, 2022

NAM Economic Report:

• Consumer prices rose 0.3% in April, cooling off after jumping 1.2% in March, which had been the strongest monthly gain since September 2005. Reduced energy costs, which declined 2.7% in April, helped to slow the headline number, with gasoline costs down 6.1%. At the same time, food prices increased 0.9% in April, just shy of the 1.0% gain in March.

• Excluding food and energy, core consumer prices rose 0.6%, up from 0.3% in March. Like energy costs, prices for apparel and used cars and trucks decreased in April, but other costs continued to increase at a solid rate. 

• The consumer price index has risen 8.2% over the past 12 months (seasonally adjusted), down from 8.6% in March, which was the fastest year-over-year pace since December 1981. At the same time, core inflation increased 6.1% year-over-year in April (seasonally adjusted), down from 6.4% in March, which was the biggest increase since August 1982.

• Overall, price pressures for consumers are likely to remain very elevated over the coming months. With the Russian invasion of Ukraine, prices are likely to remain accelerated, particularly for food, energy and certain commodities. Supply chain issues are also not likely to abate as fast as desired, especially with ongoing closures related to COVID-19 in China.

• However, the easing of year-over-year growth rates in the latest data offered some comfort, with some stabilization in inflation expected over the coming months. The current forecast is for year-over-year growth in the CPI to be 5.5% at year’s end, with core inflation at 4.9%.

• Likewise,producer pricesfor final demand goods and services rose 0.5% in April, slowing from the 1.6% gain in March. At the same time, producer prices for final demand goods increased 1.3%, extending the 2.4% growth in March, which was the largest monthly gain on record for a series dating to November 2009. In April, food and energy costs increased 1.5% and 1.7%, respectively, with 16.3% and 39.8% growth year-over-year.

• Excluding food and energy, producer prices for final demand goods increased 1.0% in April, extending the 1.1% gain in March.

• Over the past 12 months, producer prices for final demand goods and services jumped 11.0%, pulling back from 11.5% year-over-year in March, which was the largest increase on record. At the same time, core producer prices increased 6.9% year-over-year in April, edging down from the record 7.1% in March.

• The Index of Consumer Sentiment fell from 65.2 in April to 59.1 in May, the lowest reading since August 2011, according to preliminary data from the University of Michigan and Thomson Reuters.

• The National Federation of Independent Business reported that the Small Business Optimism Index was unchanged at 93.2 in April, remaining the lowest level since April 2020. Supply chain disruptions, workforce shortages and inflation continued to challenge small business owners.

• Small business respondents in the NFIB survey cited inflation as the top “single most important problem,” followed by difficulties in obtaining enough qualified labor. The labor market remained tight, with 47% saying that they were unable to fill job openings, and 55% suggesting that there were few or no qualified applicants for their job openings. 

• While initial unemployment claims inched higher in the latest data, continuing claims fell to their lowest level since the week ending Jan. 3, 1970.
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