We get the April inflation report tomorrow.
There continues to be a lot of noise about "hot" inflation data.
For perspective, let's revisit the chart of CPI as we head into tomorrow's report.
This chart should do nothing to promote fear of another surge in inflation. It's a "stall" in the disinflation trend. And as you can see from the orange dotted line, if the April monthly change in prices is in line with the consensus view, the year-over-year CPI will fall tomorrow.
And as we've discussed here in my daily notes, the stall in CPI is largely due to a couple of hot spots in the data (shelter and insurance). On the latter, the auto insurance component was up 22% year-over-year in the March inflation report. Just pulling that out, the headline CPI drops below 3%.
On that note, let's take a look at what the Progressive CEO said about auto rates in the Q1 earnings call: "Inflationary trends are showing indications of stabilizing … It's comforting to be able to report that we're pivoting to a more normalized operation, where in most states we can take small bites of the apple when it comes to rate (i.e. prices) … so, we'll continue to focus on having more stable rates."
