Inflation Jumped in April. Why That Should Be OK.

Inflation beat expectations last week, with data for April revealing a stunning 0.9% increase in the core consumer price index (which strips out volatile food and energy prices) over March. This was the single largest monthly increase since the early 1980s when inflation was a much bigger concern than today. But on the other hand, such an increase shouldn’t be all too surprising, especially in light of last week’s jobs report in which apparent labor shortages in some low-wage industries led to employers raising wages. The economy is still evolving at unprecedented rates and in untypical ways, and as such, data releases require extra care in interpretation.