Analysts at Nomura explained their outlook for the US CPI.
Key Quotes:
“After core CPI inflation slowed to 0.1% (0.098%) m-o-m in April, we expect only a modest rebound to 0.2% (0.158%) m-o-m in May (Consensus: 0.2%), corresponding to 2.2% (2.198%) on a 12-month basis (Consensus: 2.2%). Part of the softness in May core CPI inflation was likely owing to continued weakness in used vehicle prices and negative payback from an unusually large increase in April rent inflation.”
“Higher jet fuel prices may have pushed up airline fares in April, posing some upside risk. However, we think that overall, core CPI likely increased at a trend-like pace in May, consistent with our view that inflation will accelerate only gradually.”
“For non-core components, higher crude oil prices likely translated into higher retail gasoline prices while food prices likely increased at a steady pace of 0.2% m-o-m.”
“Altogether, we expect headline CPI to increase by 0.3% m-o-m (0.259%, Consensus: 0.2%), corresponding to 2.8% (2.834%) on a 12- month basis (Consensus: 2.7%). Our forecast for CPI NSA is 251.670 (Consensus: 251.557).”
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