US: Core CPI inflation to accelerate to a trend-like pace of 0.2% - Nomura

Analysts at Nomura expect US core CPI inflation to accelerate to a trend-like pace of 0.2% (0.159%) mo-m (1.840% y-o-y) in May (Consensus: 0.2% m-o-m, 1.9% y-o-y).

Key Quotes

“Core CPI inflation increased only 0.1% (0.071%) m-o-m in April after the decline since January 2010 in March. Some downward pressure on core CPI over the prior two months (e.g., wireless telephone services), appears, to a large extent, to have waned in May. However, we do not expect a big jump to compensate for the weakness in the prior months. Among noncore components, energy prices likely declined sharply by 3.1% m-o-m in May, led by a more than 5% drop in domestic gasoline prices. On the other hand, food prices likely continued to rise modestly by 0.4%.”

“Overall, we think headline CPI inched down 0.1% (0.052%) m-o-m (Consensus: 0.0%). This forecast implies a 1.966% y-o-y increase (Consensus: 2.0%). Our forecast for CPI NSA is 244.952 (Consensus: 244.900).”