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In May, US PPI report suggested moderate pipeline inflation as both processed and unprocessed material prices excluding food and energy did not show signs of a material acceleration during the month, notes the research team at Nomura.

Key Quotes

“While the prices paid index of the ISM manufacturing survey eased in June, it indicated continued increases in raw material prices and points to some potential for a pickup in pipeline inflation.”

“Moreover, among components relevant to the core PCE price index, PPI hospital services prices for previous months could be revised as the BLS incorporates delayed responses and makes necessary corrections for this series.”

“A potential downward revision to the February reading of hospital services prices would exert further downward pressure on core PCE y-o-y inflation.”