US CPI: Headline prices expected to increase by 0.36% m-o-m - Nomura

Research Team at Nomura, forecasts that energy prices increased sharply in April, which should put upward pressure on headline prices, which we expect to increase by 0.36% m-o-m (+1.1% y-o-y) (Consensus: 0.3% m-o-m, 1.1% y-o-y).

Key Quotes

“CPI increased by less than expected in April. Both noncore components (energy and food) and core components were soft, suggesting that the prior firming of core inflation was transitory. Prices of imported consumer goods (excluding foods, energy, and autos) declined for the second straight month in April.

Given that prices of imported consumer goods and CPI’s core goods prices tend to move in tandem, there are some downside risks for core CPI in April. This should offset, to some extent, the positive impact from the recent tightening of labor markets. As such, we expect a 0.10% m-o-m (+2.1% y-o-y) gain in core CPI in April (Consensus: 0.2% m-o-m, 2.1% y-o-y).”