The Federal Reserve Bank of Cleveland's daily inflation nowcasts point to a clear divergence between headline and core price measures for April, attributing most of the headline rise to higher energy costs and supply-chain disruptions stemming from the Middle East conflict.
On a year-over-year basis, the bank's projection for the April consumer price index is 3.71%, up from the March CPI nowcast of 3.25%. The Cleveland Fed's nowcast for the Fed's preferred inflation gauge, the personal consumption expenditures index, stands at 3.58% for April compared with a March nowcast of 3.28%.
Core inflation measures show a much smaller change. The nowcasted year-over-year core CPI is 2.56% for April, slightly under March's 2.6%. Core PCE is forecast at 3.03% for the current month, versus March's 2.97%.
The Cleveland Fed updates these nowcasts daily with the aim of projecting where headline and core inflation measures stand in near real time. The bank notes that the pattern in the current projections aligns with recent policymaker comments regarding the composition of inflationary pressures.
For context within official data releases, the bank's projections stand above recent reported annual changes. The overall CPI was up 2.4% on a year-over-year basis in February, while the overall PCE price index had risen 2.8% in January from the same month a year earlier.
In a separate analysis, the New York Federal Reserve reported that labor market tightness eased in February to below normal levels. The bank identified the easing as being driven by declines in both the ratio of vacancies to effective searchers and in the quits rate.
The New York Fed also observed that over the last half year wage pressures have become similar to levels seen in late 2015.
Taken together, the Cleveland Fed's inflation nowcasts and the New York Fed's labor market findings provide a snapshot of the current inflation-labor dynamic: headline inflation appears more sensitive to energy and supply-chain shocks, while core price measures and recent wage trends show more moderate changes.