Unpacking April’s Inflation Report

April's inflation report came out this morning. And while the results weren't perfect, it leaves a lot of room for optimism. So first, when looking at this, keep in mind it's a 12 month rolling average on the year over year inflation. So that means we're dropping off April 2022's numbers, replacing it with this April's numbers. So last April, the monthly inflation was 0.6%. So if we come in under that, it's a good thing for mortgage rates. Well, the Bureau of Labor Statistics, which is who runs those reports, they changed their algorithm all of a sudden and they revised last april's numbers from 0.6 to 0.4. So we had that fear the whole time for nothing. So the goal post moved a little bit. And then if we look April's actual inflation, there was two things that stick out. Used car prices were up 4.4% this April. If you times that by a whole year, that'd be a 50% increase in used car prices. Not sustainable. So kind of a blip on the radar that artificially bumped up inflation, I would say. And number two was oil production got cut for a few weeks this April. It bumped prices up temporarily. It's already been fixed. But that did make this April's inflation a little bit hotter than it normally would have been. If it wasn't for those two factors, this month's inflation for April would have been 0.2%, a big drop from last year. But they snipped us down from 0.6% to, to 0.4 on the previous year. And because of those 2 things, we actually went from 0.2 to 0.4. So we had a flat line. It took both of those factors to just have a baseline and not a big movement in mortgage rates. But the optimistic part is it took two things to do, crazy things to happen. If that doesn't happen, we have a party today, mortgage rates start dropping. So I think rates dropping is now just delayed 30 days. Take a look at next month's inflation report.