By Geoffrey Smith
Investing.com -- U.S. inflation surged to its highest rate since the eve of the 2008 financial crisis in April, as last year's collapse in oil prices and a nascent economic recovery combined to generate the kind of number that many market participants have feared.
The consumer price index rose 4.2% from a year ago, according to government data released on Wednesday, well above consensus forecasts for 3.6%. However, the 0.8% rise in prices in April alone made clear that the spike wasn't entirely a result of distortions from last year, when crude oil prices briefly dipped below zero against a Covid-19-driven collapse in demand.
Even when stripped of some of their more volatile elements, the data were ugly: the core CPI, which excludes food and energy prices, rose 0.9% on the month, its biggest monthly rise since the early 1980s. That left core inflation running at a rate of 3.0%.
The biggest factor behind the jump appeared to be a 10% rise in prices for used cars in trucks, which was in turn due to various factors such as the reopening of more of the economy, an aversion to using mass transit amid lingering infection risks, and a shortage of inventory from the auto industry because of the global chip shortage. That rise was the biggest since the government started tracking it in 1953 and it accounted for over a third of the seasonally-adjusted increase in the overall price level.
Other items that the Department of Labor Statistics said had a big impact on the numbers were housing, airline fares, recreation, vehicle insurance, and household furnishings.