US: Core PCE inflation to increase 0.156% in May – Nomura

Analysts at Nomura expect US core PCE inflation to increase 0.156% m-o-m in May, bringing the 12-month change to 1.9% (1.888%), from 1.8% previously.  

Key Quotes

“May’s CPI data show higher prices for food away from home (excluded from core CPI but included in core PCE inflation) along with higher prescription drug prices should be positive to core PCE inflation. However, relevant components of the May PPI data, including hospital services prices, were negative to May core PCE inflation.”

“Altogether, we estimate that PPI-relevant components will contribute roughly 0bp (-0.4bp unrounded) to core PCE inflation in May, down from +2bp in April. For non-core components, we expect a modest decline in food prices to partly offset higher energy prices. Altogether, we expect headline PCE inflation to increase 0.166% m-o-m (2.20% y-o-y).”