Inflation plus a few misc. notes

Prices are rising faster again.

The April inflation report came in hot. Prices were up 3.8% from a year ago, the highest inflation reading since May 2023. Prices also rose 0.6% from March to April alone. That may sound small, but for inflation, it’s a big monthly jump.

The obvious reason is energy. Gas prices rose sharply, and energy was responsible for a large share of the monthly increase. But housing costs also picked up. Shelter rose 0.6% in April after rising 0.3% in March. The implications are big here because housing is obviously one of, if not the, biggest part of most household budgets. When housing gets more expensive, inflation is harder to ignore because people are getting squeezed from both sides. Gas is more expensive. Food is more expensive. Housing is still getting more expensive. 

Markets noticed with stocks opening lower and Treasury yields moving higher. Investors are less confident that the Federal Reserve can lower interest rates soon. If inflation keeps going up, an eventual increase. 

The next question is whether people start pulling back. Do they keep spending or start cutting back? The next retail sales report is scheduled for May 14 at 8:30 a.m. ET. It will show whether people were still spending in April.

Two other things would help. First, oil markets need to calm down. That probably requires real progress in the Strait of Hormuz, where disruptions have pushed energy prices higher. Second, housing needs to cool. That is harder. More housing supply would help, but that takes time. A weaker job market could also slow rent growth, but the April jobs report was stronger than expected, which gives the Fed less cover to say the economy is slowing.

Small nerd note, but useful: BLS changed the base year for some CPI index series to December 2024 = 100. That does not change the percent increases people care about, but it can make raw index numbers look different if you are comparing old tables to new ones.

The next CPI report lands June 10. 

Remind your friends Tiktok isn’t a doctor

Pew Research released a study last week: four in ten U.S. adults, including half of adults under 50, get health and wellness information from social media influencers or podcasts. Getting advice about what to eat, what to avoid, what supplements to take, and what “protocol” to try from people on the internet.

Like supplements, this information is unregulated. The person who gets surfaced is rarely the person with the best credentials. It is the person with the best hook, the cleanest video, and sometimes the highest affiliate commission.

Cannes opens tonight

The 79th Cannes Film Festival opens tonight on the Croisette and runs through May 23. The opening film is Pierre Salvadori’s The Electric Kiss. 

Twenty-two films are competing for the Palme d’Or. 

Major studios are mostly sitting this one out, according to Reuters. That makes Cannes feel less like a giant red-carpet ad campaign and more like a real film festival again. And it might actually make the festival better. When the studios stop using Cannes to launch summer tentpoles, the films in competition get more room to matter.

Two things to watch: Nemes, because he hasn't missed in a decade, and anything out of Un Certain Regard that starts to generate acquisition buzz.

More on Thursday.