4/18/23 Market Snapshot: CPI report, Producer Price Index, and U.S. retail sales

his week’s Consumer Price Index (CPI) report was in line with expectations with a yearly increase of 5.0%, while the Core CPI, which excludes food and gasoline prices, moved slightly higher to 5.6%. While both metrics seem to indicate moderating inflation, the readings remain above Federal Reserve’s target inflation rate of 2.0%. The Producer Price Index (PPI) surprised to the downside with a decline to an annual rate of 2.75%, its lowest level in 2 years. Both the CPI and PPI reports are leading many market participants to believe that the Fed may be reaching the end of their rate hiking cycle. However, at the close on Friday, interest rate futures were still leaning towards the Federal Reserve raising rates by 25 basis points at their May meeting.