Home ETFs Inflation Eases From 40-Year High, But Core Prices Stay Elevated

Inflation Eases From 40-Year High, But Core Prices Stay Elevated

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Updated at 9:00AM ET

U.S. inflation moderated moderately last month from the fastest pace in 40 years, but core consumer price pressures continued to mount, data from the U.S. Bureau of Labor Statistics showed on Wednesday, suggesting readings in the world’s largest economy have continued to rise longer than expected .

The headline consumer price index in April is estimated to have risen 8.3% from a year earlier, down from 8.5% in March and the fastest pace since December 1981.On a monthly basis, inflation rose 0.3%, the Bureau of Labor Statistics said, compared with a 1.2% surge in March

However, the report noted that so-called core inflation, which strips out volatility such as food and energy prices, rose 0.6% for the month and 6.2% from a year earlier, near its highest level since February 1991. The annual and monthly readings came just ahead of Wall Street consensus forecasts.

A sharp rise in airfares (up 33% from last year) as well as used car prices, veterinary fees and the cost of delivery services drove core prices higher, suggesting inflationary pressures may be embedded more deeply in the world’s largest economy.

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Wall Street futures stocks reversed their premarket gains following the data, with the Dow Jones Industrial Average now showing a 202-point loss at the open and the S&P 500 down 16% for the year, down 42 points. The tech-heavy Nasdaq is expected to drop 195 points.

The yield on the benchmark 10-year U.S. Treasury note rose 8 basis points to 3.06% after the data and ahead of an auction scheduled for later this afternoon, while the U.S. dollar index, which tracks the greenback against a basket of six global currencies, retreated to Near a 20-year high of 104.032.

CME Group’s FedWatch tool showed an 86.2% chance of a 50-basis-point rate hike in June, but a 14% chance of a 75-basis-point lower than the 75-basis-point rate trade that began factoring in rates late last month.

Growth in the U.S. economy has now slowed to 1.8%, compared with expectations for a contraction of -1.4% for the three months through March, according to the Atlanta Fed’s real-time benchmark GDPNow forecast tool.

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