This month was a return to the recent norm. On a month-to-month basis, rent inflation popped up and non-shelter inflation retreated. But, March 2017 had a very negative reading, so on the year-to-year measure, inflation was almost certain to rise this month.
April 2017 had a pretty low reading too. So, it still looks to me like we are basically in a holding pattern with shelter inflation above 3% and core non-shelter inflation hanging around 1%.
It still seems like this could, hypothetically, go either way; but the Fed has a hawkish bias, which I still expect to eventually turn things south. I fear I'm becoming a perma-bear. I swear I was bullish before. I was shorting Eurodollars in 2013.
It is possible for things to go on like this for a while - healthy growth and de facto 1% inflation. But, in an uncertain world, where there is bound to be stochastic movement, I think it's a good bet that the Fed will eventually get too far along and will be slow to pull back. Slow credit growth, low inflation, and low investment levels suggest there isn't much of a buffer.
But, this has been going on for two years, so even if it happens, I can't really claim that I called it. It is what it is, regardless.