US Watch: April CPI inflation: Core concern

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US Watch: April CPI inflation: Core concern

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US Watch

April CPI inflation: Core concern

Another jump in inflation 12 May 2026

Headline CPI rose by 0.6% m/m in March, led by a 3.8% m/m increase in energy. Core Macro

CPI printed above our expectations at 0.38% m/m. Based on the details of the report, we United States

are tracking April core PCE at 0.30% (3.3% y/y). For the headline, we’re tracking 0.4%

m/m and 3.8% y/y. Inflation is getting very uncomfortable for the Fed.

US Economics

BofASIran conflict continues to drive inflation

The jump in energy inflation in April can be attributed to the impact of the Iran war on Stephen Juneau

US Economist

gasoline prices. With gas taking another leg up in May so far, there might be another BofAS

sizeable pickup in headline inflation in the pipeline. The impact of the war can also be stephen.juneau@bofa.com

seen in airfares, which were up 2.8% m/m. Aditya Bhave US Economist

BofAS

Core goods inflation was benign aditya.bhave@bofa.com

Core goods were roughly flat on the month. Apparel had another strong month, but that US Rates Research BofAS

was offset by declines in household furnishings and medical care commodities. On

Meghan Swiber, CFA

balance, the core goods data suggest tariff effects may be starting to fade, as expected. Rates Strategist

Core services: too hot to handle +1meghan.swiber@bofa.com646 743 7020

However, core services inflation was uncomfortably elevated. Investors should look G10 FX Strategy

through the outsized housing print, which was payback for the effect of the shutdown on MLI (UK)

the Oct data. The concern is that core services ex housing came in at 0.5% m/m, led by Alex Cohen, CFA

FX Strategist

large increases in airfares, lodging away from home and other personal services. BofAS