- The Consumer Price Index (CPI) rose 8.3% in April versus the prior year
- The average rate last week for a 30-year fixed mortgage loan was 5.3%
- The University of Michigan Index of Consumer Sentiment decreased to 59.1 in May from 65.2 in April
Top Three Market Headlines
High Inflation Persists in April: The U.S. Department of Labor reported last week that the Consumer Price Index (CPI) rose 0.3% in April from March; on an annual (year-over-year) basis, the CPI increased 8.3%, down slightly from 8.5% in March. The "core" CPI, which excludes energy and food costs, registered a 0.6% increase on the month and a 6.2% annual increase. Energy prices were up 30% from the prior year, but actually dipped 2.7% for the month, including a 6.1% drop in gasoline prices. Food prices, on the other hand, continued to accelerate, rising 0.9% on the month and 9.4% on the year—the latter was the largest 12-month increase since April 1981. Meanwhile, the Producer Price Index (PPI) rose 11% in April on an annual basis, its fifth consecutive month with a double-digit gain.
U.S. Mortgage Rates Rise to a 13-year High: The average rate for a 30-year fixed mortgage loan was 5.30% last week, according to Freddie Mac. Up from 5.27% the week before, this rate has now reached its highest point since July of 2009. As interest rates continue to rise—the 10-year Treasury bond yield recently hit 3% for the first time since 2018—mortgage rates are expected to follow the same trend. During what is usually the busiest season for the housing market, higher mortgage rates may pressure on consumers to complete purchases before loans become more expensive, while shutting others out of the housing market entirely.
Consumer Sentiment Falls to Lowest Level in a Decade: The Index of Consumer Sentiment published by the University of Michigan decreased from 65.2 in April to 59.1 in May, the lowest level since 2011 and well below pre-pandemic levels. The index is based on surveys of consumers regarding their outlook on the U.S. economy. Inflation remains top of mind for consumers according to the report, with consumers expecting prices to rise 5.4% over the next year, the highest expected level in over 40 years. Adding to the pressure was decreased confidence from Americans regarding their current financial situation, the reading for which hit its lowest level since 2013.