Stock futures edge lower, April CPI data comes in better than expected

Yahoo Finance Live anchors break down the April’s consumer price index (CPI).

Video transcript

JULIE HYMAN: Inflation rose again in April. The Consumer Price Index accelerated to 8.3%. That is higher than estimated growth of 8.1% in prices. It's also the highest level in almost 40 years. We were looking for a bigger deceleration, and we didn't get it. Let's bring in Yahoo Finance's Brian Cheung to discuss this report. And by the way, as we saw, futures down. We saw yields go up, which you would expect, with a report like this. So what happened?

BRIAN CHEUNG: Yeah, well, I mean, for what it's worth, we did see a slowdown relative to the year over year pace that we saw in the month of March. That was 8.5% on a year over year basis. In April, as we just got about a half hour ago, that now to 8.3%. But of course, that's a very small tick down, and a lot of people will continue to say that this shows inflationary numbers continuing to be at high levels that Americans are uncomfortable with.

When you unpack the components of this report, you take a look at gasoline down 6.1%. We know that the massive rip up in energy prices over the course of March because of the Russia-Ukraine situation, that's probably a component for seeing that slight tick down in the year over year numbers in this CPI report.

But look, a number of other things getting more expensive still. Transportation services up 3.1%. Airline fares up 18.6%. That's something that anyone that's tried to book a ticket lately has noticed. And then I guess one silver lining you can find in this report, used car and trucks down 0.4%. That was a trend that we had seen reverse over the last few months. So a lot of things kind of getting more expensive. And kind of specific components as well that are worth watching, eggs, for example, up 10.3% month over month. It should be interesting to see if we can get some color perhaps on this show from the ag on that one. But I mean--

JULIE HYMAN: Sozzi's mom knows that.

BRIAN CHEUNG: My mom texted me the same thing, too.

BRIAN SOZZI: You and me, we're both protein guys. We know egg prices are going through the roof. But look, we saw futures fall out of bed right after this report. And I get that month over month, that growth rate slowed. But still, I think Gargi Chaudhuri over at BlackRock just brought up a very good point in a note she shot over, that these are broad-based price increases and those price increases now seem to be spreading. So this doesn't derail the Federal Reserve from its aggressive pace of rate hikes-- in many respects, things that we heard from your interviews yesterday.

BRIAN CHEUNG: Yeah, well, I mean, I spoke with two Fed presidents yesterday from the Cleveland Fed, Loretta Mester, and then Atlanta Fed president, Raphael Bostic. Both of them saying that as of yesterday, they saw the case for 50 basis point moves in at least the next two meetings. Actually, Bostic saying he could possibly see a third meeting with another 50 basis point hike. But again, yesterday is not today. We'll see after the support if the Fed sentiment changes. But they were saying, look, 75 basis points, that's not their forecast.

But the wording that they used was very interesting. They said they're not going to leave anything off the table. Now, whether or not this one print is going to put steam into a 75 basis point hike in the future remains to be seen. Fed officials, including Jay Powell, have said, look, we're not just going to hinge off of one report. But worth noting that we're going to have an interview later on this afternoon with St. Louis Fed President James Bullard. He's been someone who has been not necessarily advocating for a 75 basis point hike, but the first one to entertain the possibility of one. We'll see maybe if the inflationary figure this morning gets him to a little bit closer to that type of move.

BRAD SMITH: What should the average consumer take away from the data that's come out today? Clearly, I mean, some of the prices and the inflation that we have seen month over month still growing in some categories. But if there is an area where we're starting to see that recede and that they can find any type of confidence in, where would you say that would be right now?

BRIAN CHEUNG: Well, I would say, certainly, energy is the biggest one. And I think that when you take a look at just what we've seen on the gasoline front, fuel oil actually did go up, but gasoline did go down markedly--

JULIE HYMAN: But gasoline's going back up now.

BRIAN CHEUNG: It's going back up now.

JULIE HYMAN: That's a brief reprieve.

BRIAN CHEUNG: Right, a brief reprieve, but again, I guess-- and it's not for us to predict here about when the Russia-Ukraine situation is going to alleviate, but if that does lighten up, then it's possible that you could see inflation numbers continue to go down. But the whole theme of what we've been talking about here, we're going to see a lot of notes from economists probably in the next few minutes and the next few hours that will say something to the effect of, well, isn't it still a positive development that the year over year figure is going down?

Even though the monthly figure, even at 0.3%, is perhaps encouraging, this is still a high level of inflation that Americans are not noticing any reprieve from between March and April. And until we start to see some of the lack of demand come into effect because of higher borrowing costs, because of perhaps that fiscal stimulus from last year waning, these numbers will continue to be uncomfortable for Americans. And I think the difference between 8.5% and 8.3% is going to be more negligible than 10% increases in eggs.

BRIAN SOZZI: Brian, could you ask Jim Bullard, how does he feel about paying 10.3% higher for eggs? I mean, he has to eat eggs. Why was it a big problem?

BRIAN CHEUNG: I'm sure all--

BRIAN SOZZI: What they caused.

BRIAN CHEUNG: I'm sure-- I don't know for a fact-- that all Fed presidents probably eat and buy eggs. For James Bullard, I'll see maybe [INAUDIBLE].

JULIE HYMAN: Do they do their own grocery shopping? Mm--

BRIAN CHEUNG: A lot of them probably do, I would say. I mean, the regional the regional bank presidents probably do. But the Fed governors-- I don't know if Jay Powell is going to Kroger, though. Yeah, I mean, it's--

BRAD SMITH: Maybe [INAUDIBLE] order for him.

BRIAN CHEUNG: Yeah, yeah, Postmates perhaps.

BRAD SMITH: Right. Thanks for joining us here today.