A preview on the data release by Nomura
- We expect a moderate increase in April CPI
- Our forecast for headline CPI inflation is 0.3% (+0.312%) m/m which translates into a 2.5% (2.544%) gain on a y/y basis
- Excluding food and energy, we expect core CPI to show a trend-like increase of 0.2% (0.169%) m/m in April
- This would translate to y/y core CPI inflation of 2.2% (2.193%), up slightly from 2.1% in March
- Our forecast is based on the view that inflation of core goods prices remained weak despite growing concerns over trade disputes and higher commodity prices
- Although the lagged effect of the weaker US dollar last year could have pushed up core goods prices, the pass-through of exchange rates to domestic consumer goods prices has been very weak
The estimate for the headline reading is +0.3% m/m, with a +2.5% y/y reading. As for the core reading, the estimate is for +0.2% m/m and +2.2% y/y. Nomura's forecasts are in line with those estimates.
The Fed pays more emphasis to the PCE reading, but a rise here is an early indicator that we are seeing an uptick in inflation in the US economy.
Though not a key point of focus, look out for the weekly and hourly earnings in the report. They will be a tell on wage-based inflation - which is what the Fed would want if inflation were to tick higher.
