Goldman Sachs predicts a subtle deceleration in the US core CPI for April, projecting an increase of 0.28%, slightly below the consensus expectation of 0.3%. This forecast suggests a cooling from the 0.37% average increase observed in Q1, potentially impacting future monetary policy decisions.
Key Points:
- Core CPI Slowdown: Expected to rise by 0.28% in April, marking a slowdown from the first quarter's average of 0.37%.
- Transportation Costs: Anticipated decreases include a 2.5% reduction in airfares and a 0.8% drop in used car prices, with new car prices expected to remain stable.
- Housing Costs: Rent is forecasted to increase by 0.37%, with Owners' Equivalent Rent (OER) expected to rise by 0.45%.
- Insurance and Services: Car insurance rates are expected to decelerate to 1.6% (from 2.6% in March), while health insurance rates are projected to remain flat. Tax preparation services are expected to provide a 2bp boost.
- Energy and Food Prices: Energy prices are projected to increase by 1.7%, and food prices by 0.3%, contributing to an overall headline CPI rise of 0.37%.
- Annual Core CPI Adjustment: The forecast would lower the year-on-year change in the core CPI by two tenths to 3.6%.
Conclusion:
Goldman Sachs' analysis indicates a possible easing trend in inflation, which could reduce the urgency for aggressive monetary tightening. This mild slowdown, if confirmed by actual data, may encourage the Federal Reserve to maintain a cautious approach to interest rate hikes, balancing growth with inflation control.
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