🏦 The great rate-hike divide

Hot off the BLS press… The US just got its inflation report card for March, and the results were… interesting. Consumer prices rose 0.1% for the month, but less than Wall Street’s expected 0.2% climb. Stocks were mixed after the #s dropped, as investors questioned whether the mellower-than-expected data could (finally) lead to a rate-hike pause. The report's timing is key: yesterday’s inflation data came after March’s banking blowup and before the Fed’s expected early-May rate decision.

• Sunny side up: Grocery prices fell 0.2% in March, marking the first decline since 2020. Egg prices also started to crack, plunging more than 10% from February highs.

• Upside down: Rising shelter prices (like: rent, hotel costs) were the main driver of rising consumer prices, even as rent growth cooled.

The great rate-hike divide… Fed Chair Powell has been loud about staying the course of raising rates to crush inflation. Despite that, earlier this month banking worries and underwhelming labor data had traders betting on only a 43% chance that the Fed would hike interest rates in May. After yesterday's mixed report (think: still high inflation that's showing signs of easing), those odds stood at nearly 70%. Muddying things, earlier this week two Fed presidents expressed contrasting views over whether more hikes would be needed to curb inflation.

It’s not about the journey… it’s about how much it costs to get to the destination. The early pandemic race that saw delivery speeds approaching Mach levels (at discount prices) is slowing. Now big online retailers are raising shipping costs and shifting what “free shipping” means:

• New terms: At the end of February, Amazon bumped the minimum purchase total for its free grocery-delivery service to $150 (up from $35).

• More-to-door: FedEx and UPS said they're raising their rates by an average of 7%.

• For a price: Nike and Best Buy offer free shipping as a membership-program perk (the cost: shared personal data).

Timing isn’t everything… Determined to keep order totals low, consumers are increasingly opting for longer (that is: cheaper) wait times over costlier fast delivery. The number of packages delivered through Amazon’s shipping option that credits customers up to $1.50 for choosing slower delivery has doubled since 2020, the company said. Meanwhile, a recent survey of online shoppers found that 41% rank shipping cost as their top priority when placing an order (up from 33%), while 22% rank delivery speed as the most important factor (down from 29%). It seems shoppers aren't in a rush: another survey found that 85% of what’s ordered online isn’t opened for days.

• MopUp: Walmart said it’s closing four unprofitable Chicago stores after deciding earlier this year to shutter locations in Portland and DC. The big-box behemoth has struggled with its urban stores' profitability.

• Sweet: The price of raw sugar has shown signs of easing after rising 17% this year. The price (the highest in a decade) could lead to increased costs for food and drink makers, and to higher grocery bills.

• Whoops: Ernst & Young scuttled a $100M plan to split its auditing and consulting biz into two (the goal: reduce conflicts of interest). The Big Four firm reportedly failed to account for internal opposition.

• $nail: The USPS said it's raising the cost of a first-class stamp to 66 cents (from 63 ) in July. The agency said the increase — the fourth in two years — would help ease inflation's effect on its expenses.

• VFlee: Last quarter, VC funding for crypto startups plummeted 80% on the year. While bitcoin has surged 80% year to date, the crypto industry faces increased regulatory scrutiny following FTX's failure.

• Earnings expected from Delta and Infosys

Authors of this Snacks own bitcoin and shares: of Walmart

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