US CPI Prep (10th June)

Forecasts & Ranges
US CPI YoY Forecast 4.2%, Previous 3.8% Range 4.3% / 4%
US CPI MoM Forecast 0.5%, Previous 0.6% Range 0.7% / 0.4%
US Core CPI YoY Forecast 2.9%, Previous 2.8% Range 3% / 2.7%
US Core CPI MoM Forecast 0.3%, Previous 0.4% Range 0.4% / 0.1%

Investment Bank Views
HSBC
If this Wednesday and Thursday’s CPI and PPI figures are also stronger than expected, then it could cause further USD strength and support the hawkish Fed narrative. Last week, we also mentioned how we will soon need to talk about Kevin (Warsh). It is not clear what tone he might strike at his first FOMC meeting. However, the latest data challenge the idea of him being a convincing dove. This all feeds into the debate over whether King dollar is returning.

Goldman Sachs
After Friday’s strong NFP number, and an important breakout the USD, the CPI figure on Wednesday is now top of mind. We estimate a 0.17% increase in May core CPI (month-over-month SA), which would leave the year-over-year rate unchanged at 2.8% on a rounded basis. We forecast benign readings for the shelter categories—a 0.22% increase in the OER category and a 0.22% increase in the rent category—reflecting the continued slowdown in their underlying trend.

Deutsche Bank
Our economists expect energy to play a key role in May’s CPI, with a sharp increase in petrol prices (around +6.8% seasonally adjusted) lifting headline inflation more than core. They forecast headline CPI to rise by around +0.55% month on month (after +0.6% in April), while core CPI is expected to increase by a still firm +0.22% (after +0.4%). On a year on year basis, headline CPI is projected to move back up to around 4.3%, from 3.8%, while core inflation is expected to edge higher to roughly 2.9%.

Summary of Last Report
CPI rose 0.6% m/m in April (after 0.9% in March), with inflation at 3.8% y/y, while core increased 0.4% m/m and 2.8% y/y. The move was driven mainly by energy (+3.8%), especially gasoline, alongside shelter (+0.6%), which remained a key contributor.

Food prices rose 0.5% m/m, with broad increases across groceries, while core saw gains in furnishings, airline fares, apparel, and personal care, offset by declines in vehicles, communication, and medical care. Services inflation, particularly shelter, remains firm, while goods are more mixed, with energy and food contributing to the broader upside.