US CPI Preview: Index expected to remain unchanged in May - Wells Fargo

On Wednesday, before the FOMC statement, the May Consumer Price Index report will be released. Analysts from Wells Fargo, expect no change in the index in May, in line with market consensus estimates and the 12-month rate to drop to 1.9%. 

Key Quotes: 

“The Consumer Price Index (CPI) rose 0.2 percent in April, partially recouping the prior month’s 0.3 percent loss. Energy prices, which tend to be a significant factor in the monthly headline performance, rose 1.1 percent on the month. The core CPI inflation environment remains soft, however. Core consumer prices rose a modest 0.1 percent in April, while the annual core inflation rate slipped below 2 percent for the first time since October 2015. The three-month annualized rate of core CPI has also fallen from its recent high, pointing toward further moderation in the year-overyear rate in the coming months.”

“We expect the CPI to be unchanged in May, with the year-over-year decreasing to 1.9 percent. While the CPI has been weaker than our initial expectations, our overall economic growth outlook remains in place, and we do not think the recent soft inflation prints will
deter Fed officials from raising rates at the June meeting.”