US CPI: An exceptionally weak report – TDS

An exceptionally weak report, and not just because of energy prices as core inflation weakened sharply as well, economists at TD Securities inform.

Key quotes

“The total CPI was -0.8% m/m in April, matching the BBG consensus (TD: -0.7%.) The core index was -0.4%, below the -0.2% consensus (TD: -0.2%).”

“We caution against simply extrapolating the weakness, as some of it is likely to either run its course or be reversed over time as the economy starts to normalize again. We certainly don't expect a negative trend in core prices on an ongoing basis.”

“We expect the crisis to result in a sustained slowing in inflation due to a net increase in slack. The trend in inflation was already too low from the perspective of Fed officials.”