Meet Kevin: WFT *JUST* Happened- Inflation Disaster & CPI Numbers

This month’s inflation data had a little of something for everyone – but just a little. Inflation did drop year-over-year. But it also came in higher than expected. That still leaves inflation rates at their second-highest level in over 40 years.

The biggest issue is that core inflation rose higher than expected, thanks in part to rising food prices. Core inflation is the key metric used by the Fed when determining interest rates.

On the YouTube channel Meet Kevin, there’s a deeper dive behind those headline numbers. And it’s clear that the core number is holding up strongly, against expectations for a larger amount of goods and services coming down.

The biggest determination for core inflation is food, energy prices, and transportation costs. So when energy prices rise, transportation prices tend to rise as well, which tends to magnify the costs.

That explains why airline prices are up 33 percent over the past year, with an 18.6 percent jump in the March numbers, one of the biggest reasons for inflation coming in strongly.

These numbers suggest that bond yields will continue to rise, with 10-year Treasury yields still holding up near 3 percent. And that the Fed will need to continue hiking interest rates relatively aggressively, in order to ensure that inflation gets knocked down even further.

To view the full breakdown on the latest change in CPI and what it means, click here.