Inflation Rose to 8.3% in April, With Monthly Core CPI Doubling From March

Bitcoin dropped sharply after the release.

May 11, 2022 at 12:37 p.m. UTC
Updated May 11, 2022 at 2:27 p.m. UTC

Helene is a U.S. markets reporter at CoinDesk, covering US economics, stablecoins, and Wall Street. She is a recent graduate of New York University's business and economic reporting program.

U.S. inflation slowed last month for the first time since November 2020, a Labor Department report Wednesday showed.

The consumer price index (CPI), the most widely used gauge to track inflation, dropped to 8.3% in April from a year earlier, down from 8.5% in March, a four-decade high, according to the report published Wednesday. Economists had estimated an 8.1% rate for April.

But core inflation, which excludes seasonally volatile food and energy prices, rose 0.6% from March, double the rate from the prior month and higher than the 0.4% clip that economists had forecast.

Bitcoin (BTC) was down 4.8% within minutes after the report was released, changing hands at $30,145.

Crypto analysts and traditional economists alike are watching core inflation particularly closely this month, as headline inflation figures could be misleading because of a big jump in the CPI this time last year.

“The year-on year-numbers are going to come down, almost no matter what,” said Eric Winograd, director of developed market economic research at AllianceBernstein. ”That isn't particularly meaningful, because it doesn't tell us what's really going on with prices right now. It tells us what went on with prices a year ago.”

The CPI saw a big jump during the spring last year, from 2.6% in March to 4.7% in April, making it difficult to draw comparisons between this year’s numbers.

CPI numbers over the past year (Source: CoinDesk Research, Department of Labor Statistics, FactSet)

Core inflation, however, is the percentage change month-over-month, which is why analysts prefer looking at that data point to evaluate current inflationary pressure.

Compared with inflation reports earlier this year, April’s report could be less significant for traders in general, as they track inflation to make assumptions about what the Federal Reserve might do to keep inflation in check.

“They've already told us their next step,” Winograd said. “So it takes something very dramatically different for them to change that path.”

Fed Chairman Jerome Powell has already said that it is very likely that the central bank will increase the interest rate by half a percentage point at each of the next couple meetings.

President Biden weighs in

Many critics blame President Joe Biden for the highest inflation in 40 years and for deflecting the blame for the current state of the economy.

With midterm elections coming up in November, the president spoke about inflation on Tuesday, assuring Americans that he is “taking inflation very seriously" and saying "it’s my top domestic priority.”

“President Biden and the Democrats are likely to be hard put to maintain their majority in Congress,” said Scott MacDonald, chief economist at Smith's Research & Gradings. “An economy in trouble, with a recession of near recession, tight money policy and inflation does not make a good tailwind.”

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Helene is a U.S. markets reporter at CoinDesk, covering US economics, stablecoins, and Wall Street. She is a recent graduate of New York University's business and economic reporting program.

Helene is a U.S. markets reporter at CoinDesk, covering US economics, stablecoins, and Wall Street. She is a recent graduate of New York University's business and economic reporting program.

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