• Macro Monday
  • Posts
  • The Surprising Truth About The April CPI Report

The Surprising Truth About The April CPI Report

The Macro Institute's Weekly Economic Primer

Author

The Macro Institute
May 18, 2026

Don’t have time to watch the whole video? Here’s 5 Key Takeaways:

🔹April’s CPI Report Was Hotter Than Expected: Headline CPI came in at 3.8% in April, which is up from 3.3% in March and the highest it has been since May 2023. Core CPI accelerated to 2.8%, its hottest print since September.

🔹Core Inflation Was Largely Driven By Shelter: Shelter makes up almost 45% of Core CPI and spiked in April. However, that shelter’s increase was most likely a statistical artifact dating back to the government shutdown and not a real signal.

🔹Real Wage Growth Has Turned Negative: For the first time since February 2023, real wage growth turned negative in April. While it is just one data point, the “resilient consumer” story faces its first real test of 2026.

🔹The Spike In Inflation Has Altered The Fed’s Course: As inflation has accelerated, basically any chance for multiple rate cuts in 2026 has evaporated. This coincides with Kevin Warsh taking over as Fed Chair.

🔹Bond Markets Still Trust The Fed: While the Fed’s independence has been threatened at times this year, the bond market still believes the Fed will be able to maintain long-term inflation close to its 2% target.

Miss our last few videos? No worries. Here are some of the most popular 👇

Live Workshop With Francois Trahan

Join us virtually on June 30th for our annual live macro investing workshop, a half-day virtual event led by Francois Trahan.

This event will sell out. Reserve your seat today.

It’s a fast-paced, practical intro to macro investing techniques taught by a Wall Street legend. This event is perfect for everyone from summer interns to mid-level investment professionals.

Macro Data Center

The Macro Week Ahead

📆 Last Week’s Data Key Takeaways

🔹 Headline CPI Hit A 3-Year High, But Core Stole The Show: Headline CPI rose +0.6% M/M in April, pushing the 12-month rate to 3.8%. That is the highest since May 2023. The index for energy rose 3.8% in April, accounting for over forty percent of the increase. But the bigger story was core CPI, which rose +0.4% M/M (vs +0.3% forecast), the largest core print since September 2025.

🔹 PPI Roared To A 4-Year High As Pipeline Pressures Built: Producer prices surged +1.4% M/M in April (vs +0.5% forecast), the biggest increase since March 2022. Year-over-year, PPI jumped +6.0%, the largest 12-month increase since December 2022. Prices of goods jumped 2%, led by a 15.6% surge in gasoline as war in Iran continued to drive cost of oil higher.

🔹Retail Sales Slowed As Consumers Bought Less But Paid More: Retail sales rose just +0.5% M/M in April. Sales at gasoline stations recorded the biggest increase at +2.8%. Strip out gas station receipts and nominal retail sales were up 0.49% month-over-month and up 4.87% year-over-year, but after adjusting for inflation, real retail sales were down 0.15% M/M.

🔹 Small Business Optimism Stayed Below Average: The NFIB Small Business Optimism Index rose 0.1 points in April to 95.9, below its 52-year average of 98.0 for the second consecutive month. The Employment Index declined for a second straight month, while reports of both actual and planned price increases rose. NFIB Chief Economist Bill Dunkelberg noted, "Inflationary pressures continue to be a challenge for Main Street".

🔹 Existing Home Sales Inched Higher: Existing-home sales rose +0.2% M/M in April to an annual rate of 4.02M. Total housing inventory reached 1.47 million units, a 5.8% increase from March and 1.4% higher than a year ago. The median price gained +0.9% Y/Y to $417,700. Despite mixed macroeconomic signals, home sales were modestly boosted by the continued improvement in housing affordability, per NAR's Lawrence Yun.

Macro Job Board

This role will join a global team of experienced strategists and editors who combine sophisticated macro analysis, speed and news judgment to deliver a 24/7, real-time product. They will construct frameworks to translate the most pertinent themes into actionable insights across asset classes.

AQR is seeking an exceptionally talented individual to join their macro strategies product specialist team. This role will give end-to-end exposure to the portfolio management process and continued evolution of AQR’s macro strategies and will include opportunities to work with senior investment professionals across the firm.

This role will work closely with the Senior Portfolio Manager to develop systematic macro strategies, focusing on alpha research, including idea generation, statistical analysis, back testing, and implementation. Must independently explore and develop new ideas while collaborating in a team-oriented environment.

What We Read This Weekend