Inflation Showing First Signs of Peaking

(1) WAGES. On a y/y basis, today’s employment report showed that average hourly earnings for all workers rose 5.5% through April. However, the 3-month wage inflation rate has been falling below this rate for the past three months and was down to 3.7% during April. The same can be said for the 3-month wage inflation rate in goods-producing industries (4.1% vs 5.2% y/y) and service-providing industries (3.6, 5.6). (See the three charts below.)

(2) PRICES. We’ve done the same sort of analysis for the PCED measure of the consumer price inflation rate with mixed results through March: headline (6.6% 3-month vs 7.7% y/y), core (4.2, 5.2), durable goods (2.5, 10.2), nondurable goods ex-energy (10.9, 6.6), and services ex-energy (3.7, 4.3).