CPI Remains Menacing as Headline Inflation Surprises to the Upside

While CPI jumped higher, restaurant inflation continued to moderate, but remains above 4%. Food at Home increased slightly after trending down consistently since mid 2023. The prospect of interest rate decreases hasn’t been eliminated, but the number and timing of cuts has certainly been shifted.

Looking ahead to next month’s report, I suspect we’ll see more of the same. Wage inflation is running about 1pt higher than CPI and with record low unemployment prices will follow.  The CA $20 min for QSR will affect more than just restaurant wages and prices for the balance of the year – and with CA accounting for 15% of US GDP it has an outsized effect on national readings.

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