April 14th, 2025

Written by: Ryan Kelly, CFA®
Chief Investment Officer, Legato Financial Group

Amidst the volatility on Wall Street and continued uncertainty around the trade war with China, we received some good news last week from the Bureau of Labor Statistics regarding inflation. On Thursday, the Consumer Price Index (CPI) report showed that inflation declined month-over-month, marking the first monthly decrease in prices since May 2020.

CPI excluding food and energy, commonly referred to as “core CPI” and the Fed’s preferred inflation metric, also dropped from 3.1% to 2.8%. This marks the first time since March 2021 that core CPI has fallen below 3%. As shown in the chart covering the past 25 years, we’re still not at the Fed’s 2% target, but this represents a significant improvement compared to recent years.

Zooming in on just the last 5 years, but adding a breakdown by source:

The Producer Price Index (PPI) also dropped, coming in at 2.7% as reported on Friday morning, well below the median estimate of 3.3%.

Oil prices dipped as low as $60 per barrel for the first time since April 2021, helping drive the gasoline index down 9.8% year-over-year, including a 6.3% drop over the past month. The shelter index rose by 4%, still elevated but marking the lowest 12-month increase since November 2021.

Notable price increases include:

• Education: +3.9%

• Full-service meals: +4.1%

• Motor vehicle insurance: +7.5% (a painful climb)

And the standout? Eggs, up a staggering 60.4%, largely due to the ongoing impact of avian flu, which has led to the euthanization of over 150 million birds in the U.S. since 2022.

On the market side, the S&P 500 rebounded with a return of 5.73% last week after taking a 9.05% hit the previous week.

Sources:

• BLS CPI Report

• BLS PPI Report

• CBS: Bird Flu and Egg Prices

• Reuters: CPI Falls in March

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S&P 500 – measures the performance of 500 widely held stocks in US equity market. Standard and Poor’s chooses member companies for the index based on market size, liquidity and industry group representation. Included are the stocks of industrial, financial, utility, and transportation companies. Since mid-1989, this composition has been more flexible and the number of issues in each sector has varied. It is market-capitalization weighted.