MACRO: US inflation remains elevated

• Annual inflation rate in the US slowed to 8.3% in April from a 41-year high of 8.5% in March, but less than market forecasts of 8.1%. On a monthly basis, consumer prices were up 0.3%, slightly more than expectations of 0.2% but below a 16-year high of 1.2% in March. The index for gasoline fell 6.1%, offsetting increases in the indexes for natural gas (3.1%) and electricity (0.7%).
• The core CPI, which excludes food and energy, rose 0.6% in April following a 0.3% growth the prior month. Core CPI jumped 6.2% over the last 12 months, after climbing 6.5% in March. 
• Today's reading is another blow to the Fed's narrative of transitory inflationary pressures, and raises expectations for a 75 bps interest rate hike in June.

US consumer inflation in April eased slightly to 8.3% from a year ago, marking the second straight month of inflation over 8 %. Source: Bloomberg via ZeroHedge

Headline number is lower on YoY basis, however this is purely base effect from cars and gasoline, whereas the spillover gains traction in other areas - for example April shelter and rent inflation reached the highest level since Q1 of 1991, which is bad news for Fed. We were writing about this already a year ago when the FED kept sticking to its temporary narrative. Source: Macrobond, XTB 

Despite the slowdown in April which suggests that inflation may have reached its peak, the inflation is unlikely to fall to 2% target in the near future especially given the ongoing supply disruptions, labour shortages, geopolitical tensions and high energy and food prices. Rate hikes may slow demand a bit, but as long as the aforementioned factors persist, inflation should remain elevated.