06.07.07
Economic Trends
April Price Statistics
While the April price report was a bit more favorable, retail price data on balance continues to suggest that the inflation trend is a bit north of 2 percent. The Consumer Price Index remained elevated in April, rising at a 5.1 percent annualized rate. The CPI excluding food and energy rose a more modest 2.1 percent, a bit above its 3- and 6-month trends but below its 12-month trend of 2.3 percent. The alternative core measures revealed that monthly growth in retail prices decelerated from longer-term trends. The median CPI, which had risen 3 percent or more in five of the past six months, rose a more moderate 2.1 percent, while the 16 percent trimmed-mean rose 2.5 percent.
April Price Statistics
| Percent change, last: | |||||||
|---|---|---|---|---|---|---|---|
| 1 mo.a | 3 mo.a | 6 mo.a | 12 mo. | 5 yr.a | 2006 avg. | ||
| Consumer Price Index | |||||||
| All items | 5.1 | 5.7 | 4.2 | 2.6 | 2.8 | 2.6 | |
| Less food and energy | 2.1 | 1.9 | 2.0 | 2.3 | 2.0 | 2.6 | |
| Medianb | 2.1 | 3.0 | 3.0 | 3.4 | 2.6 | 3.6 | |
| 16% trimmed meanb | 2.5 | 3.1 | 2.8 | 2.8 | 2.3 | 2.7 | |
| Producer Price Index | |||||||
| Finished goods | 9.1 | 12.8 | 10.0 | 3.2 | 3.6 | 1.6 | |
| Less food and energy | 0.0 | 1.5 | 3.2 | 1.5 | 1.4 | 2.1 | |
a. Annualized.
b. Calculated by the Federal Reserve Bank of Cleveland.
Sources: U.S. Department of Labor, Bureau of Labor Statistics; and Federal Reserve Bank of Cleveland.
Longer-term trends in the retail price measures generally indicate that the inflation rate lies between 2¼ and 2¾ percent. The CPI component monthly price-change distribution reveals that in fact, almost one-third of the index is rising at rates similar to the overall inflation trend, while an additional one-third of the index rose at rates exceeding three percent. This is an improvement from the average monthly inflation rates over the past 12 months, when nearly two-thirds of the index’s components rose at rates exceeding 3 percent.
Meanwhile, year-ahead inflation expectations continue to rise, reaching their highest level since last summer, revealing that households expect a 4.3 percent rise in retail prices over the next year. Longer-term inflation expectations among households, which are correlated with movements in core inflation, reached 3.7 percent, a bit above the 3 percent–3½ percent range in which they’ve generally fluctuated for nearly decade.
