The government released the April CPI numbers this morning, and to the surprise of many, the CPI went down in April. Excerpts from the government's news release:
On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers (CPI-U) declined 0.1 percent in April, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the index increased 2.2 percent before seasonal adjustment. The index for energy decreased 1.4 percent in April and accounted for the seasonally adjusted decline in the all items index. The indexes for gasoline and natural gas both decreased significantly, outweighing increases in the indexes for fuel oil and electricity. The food index increased 0.2 percent in April, while the index for all items less food and energy was unchanged.
According to Bloomberg
The cost of living in the U.S. unexpectedly dropped in April for the first time in more than a year, signaling the world’s largest economy is recovering without causing prices to flare.
Economists surveyed by Bloomberg had expected a CPI increase of 0.1%. Also mentioned in the Bloomberg article is that the "debt crisis in Greece that has weighed on the value of the euro may keep damping U.S. inflation in coming months."
I'm afraid this gives the Fed more leeway to delay hiking rates.
As of this morning, the Fed funds futures show an implied probability of a rate hike on or before the Fed's December 14th meeting at 43%. This fell by 3% in the last 90 minutes.