Weekly Economic Trends and Indicators
The Headlines:
The Bureau of Labor Statistics (BLS) recently reported that the consumer price index (CPI) increased 0.6% during April. This follows a 0.9% increase in the CPI in March. In a separate report, the BLS reported that the producer price index (PPI) increased 1.4% following a revised 0.7% increase in March. The energy component of the PPI increased 7.8% (compared to a revised 10.1% in March) while the core PPI (excluding food and energy) only increased by 0.7% (compared to a revised 0.3% in March).
The Details:
April was the second month after the beginning of military operations around the Strait of Hormuz. The initial shock from the closing of the strait was mostly felt in the oil market. Consequently, the main global impact in March was on oil prices, which translated to a dramatic increase in gasoline prices in the U.S. Gas prices continued to rise in April, though at a much slower rate (5.4% compared to 21.2%).
In general, consumer prices showed signs that the energy price inflation was being passed through to the prices of other goods and services. Prices in the category “food at home” jumped 0.5%--the largest increase since December—mostly due to higher prices for meat, poultry, eggs, fruits and vegetables. The core CPI (excluding food and energy) also saw the highest increase in several months, increasing 0.4%.
Wholesale prices also showed evidence of the spillover effect. The PPI for final demand services increased by 1.2% in April, due mainly to price increases in trade, transportation and warehousing. Again, this is a sign that the oil and gas price increases are starting to move through the economy.
The Local Context:
Price data for the Midwest region, which includes the Quad Cities, showed that CPI inflation was slightly higher in the Midwest compared to the rest of the country. Nationally, the CPI rose 3.8% for the 12 months ending in April. However, in the Midwest the CPI rose 4.1% during that period. Housing accounts for a significant portion of that difference as shelter price inflation was 4.8% in the Midwest compared to 3.3% nationally. This represents something of a turnaround compared to recent years where housing prices in the Midwest have increased more slowly than the rest of the country.
Next week: Productivity update
