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Economic News

United States: Core Inflation Remains Sticky

May 10, 2023
Francis Généreux
Principal Economist

Highlights Indicateurs économiques de la semaine du 18 au 22 juillet 2022

  • The US Consumer Price Index (CPI) rose 0.4% in April following increases of 0.1% in March and 0.4% in February.
  • Energy prices were up 0.6%, including a 3.0% jump in gasoline prices, but both fuel oil (-4.5%) and natural gas (-4.9%) prices fell. Food prices were flat for the second straight month. 
  • Core CPI, which strips out food and energy, climbed 0.4% in April following an identical increase in March and a 0.5% advance in February. 
  • The 12-month change in the all items index continued to decline, but more modestly, falling from 5.0% to 4.9%. The 12-month change in the all items less food and energy index edged down from 5.6% to 5.5%, matching February's level.


Headline inflation cooled for the tenth straight month in April. It declined a modest 0.1%, but this follows a bigger 1.0% drop in March. Still, we expect the slowdown to pick back up over the next two months due to pronounced energy base effects.

Food prices were also lower again. After two years of average monthly price gains of 0.8% (including some 1.3% spikes), grocery prices fell 0.3% in March and 0.2% in April. Considering that they're up 23.5% since the start of the pandemic, these are modest declines. But it's clearly a step in the right direction and evidence that some inflationary pressure continues to ease.

The same can't be said of core CPI. Excluding food and energy, we're still seeing monthly increases of about 0.4%. Goods prices posted their biggest monthly advance since May 2022 in April on a 4.4% spike in used car and truck prices. Service prices excluding energy were up 0.4%, matching March's gain. Medical care services were down for the fourth month in a row, and airfares dipped 4.6%. And while shelter costs remain elevated, we still expect slower price growth in the coming quarters.


Headline inflation continues to cool and should really drop off in the next few months. Core inflation remains sticky, however, suggesting it has become entrenched and will be difficult to root out. The Federal Reserve has opened the door to a rate pause. But given still-high inflation, labour market resiliency and wage strength, that could be a risky move.