Latest CPI Data: Prices Went Down for What You Are Not Buying and Up for What You Are Buying

As expected, the Consumer Price Index declines in the aggregate in April, according to the Bureau of Labor Statistics.

The overall Index declined 0.8 percent in April on a seasonally adjusted basis, the largest monthly decline since December 2008.

But the decline was all about items no one is buying.

A 20.6-percent decline in the gasoline index was the largest contributor to the monthly decrease. The indexes for apparel, motor vehicle insurance, airline fares, and lodging away from home all fell sharply as well.

On the other hand,  food indexes rose in April, with the index for food at home posting its largest monthly increase since February 1974. The prices for food at home increased in the month by 3.5% and the prices for food away from home increased by 4.21%.

The index for meats, poultry, fish, and eggs increased the most, rising 4.3 percent as the index for eggs increased 16.1 percent. The index for cereals and bakery products rose 2.9 percent in April, its largest monthly increase ever. The index for nonalcoholic beverages also rose 2.9 percent in April and the indexes for dairy and related products and for fruits and vegetables both increased 1.5 percent in April.

Most interesting, the indexes for rent, owners’ equivalent rent, medical care, and household furnishings and operations all increased in April.  Medical care services for the month climbed by 5.8%.

Within a month or so, I expect the travel related price indexes to flatten out and then you are going to start to see major across the board indexes showing price increases given the money the Federal Reserve is pumping into the system.

-RW