Analysts at Nomura explained that the Core CPI inflation slowed in April to 0.1% (0.098%) m-o-m, partly due to transitory factors such as lower airline fares, physician services prices and recreation services prices.
Key Quotes:
“We think that some of those transitory factors waned in May and expect core CPI inflation to pick up only modestly to 0.2% (0.158%) m-o-m or 2.2% (2.198%) y-o-y.”
“The expected rebound in core CPI inflation was likely dampened by continued weakness in vehicle prices and negative payback from a higher rent inflation increase in April, but higher jet fuel prices might have pushed up airline fares strongly and pose some upside risk”
“On net, we think that core CPI inflation continued a trend-like increase in May, supporting our view that core inflation will accelerate only gradually. Among noncore components, higher crude oil prices continued to feed into retail gasoline prices while food prices likely showed another steady increase of 0.2% m-o-m. Overall, we expect headline CPI to increase by 0.3% (0.259%) m-o-m in May, corresponding to 2.8% (2.834%) y-o-y. Our CPI NSA forecast is 251.670.”
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