US CPI Forecast: Banks expect small moderation in inflation, still far from Fed target

The US Bureau of Labor Statistics (BLS) will release the most important inflation measure, the US Consumer Price Index (CPI) figures, on Wednesday, May 10 at 12:30 GMT. As we get closer to the release time, here are the forecasts by the economists and researchers of 10 major banks regarding the upcoming United States inflation print for the month of April.

Annual CPI inflation in the US is forecast to stay unchanged at 5% in April. On a monthly basis, it is expected to rise 0.4% vs. 0.1% in March. The Core CPI, which excludes volatile food and energy prices, is expected to rise 0.3% month-on-month vs. 0.4% in March, while the year-on-year rate is expected to fall a tick to 5.5%.

ANZ

“We expect core CPI inflation to rise by 0.4% MoM and headline CPI by 0.5% in April. The Fed has opened the door to a pause. Henceforth, policy will be considered on a meeting-to-meeting basis. The  Fed remains concerned about inflation being too high and will raise rates further if appropriate.”

Danske Bank

“We look for a moderation in core CPI to 0.3% MoM from 0.4% MoM but focus will be on the development in the service ex-shelter component, which the Fed highlights as the key component.”

Commerzbank

“We forecast a 0.4% increase in the CPI from March. We expect the same increase for the index excluding energy and food. The headline YoY rate would then remain at 5.0% while the core rate would fall slightly from 5.6% to 5.5%.”

TDS

“We look for core-price inflation to stay firm again, with the index rising a strong 0.4% MoM for a second straight month, as goods inflation likely continued to gain momentum. In fact, we expect core goods prices to advance at their firmest MoM pace since June last year mostly on the back of surging used vehicle prices. On the other hand, we expect shelter prices to have rebounded after March's sharp slowing. The shelter category remains the key wildcard behind any surprises on the CPI report. Separately, rising gas prices (+2.6% MoM) will likely lift non-core inflation, also helping to support a rebound on headline CPI prices (TD: 0.4% MoM). Our MoM forecasts imply 5.0%/5.5% YoY for total/core prices, respectively.”

RBC Economics

“US inflation report is expected to show headline inflation unchanged at 5%, matching the annual rate in March. A 3% monthly increase in gasoline prices (on a seasonally adjust basis) likely pushed April energy prices up slightly, to -4.5% on a YoY basis. But with oil prices running well below year-ago levels, energy prices should continue to lose steam. And though food inflation is still high, it likely slowed again in April. We expect this measure to slip to ~8% from a year ago. Outside of food and energy products, ‘core’ CPI growth also likely slowed. We expect this measure to fall to 5.4% from 5.6% in March on a YoY basis or increase 0.3% from March.”

NBC

“The energy component likely rebounded in the month, helping the headline index to advance 0.5%. If we’re right, the YoY rate should move up one tick to 5.1%. The core index, meanwhile, may have continued to be supported by rising rent prices and advanced 0.3% on a monthly basis. This would translate into a two-tick decline of the 12-month rate to 5.4%.”

CIBC

“Core prices likely maintained a 0.4% monthly pace in April, in line with the strengthening in the labor market that will have supported demand. That will have offset any softness in the shelter sub-index, which would reflect the easing in new rental rates seen last year. The core services group outside of shelter will garner the most attention, given that it’s a better predictor of the underlying output gap and where inflation is headed. On that front, the acceleration in the labor market could portend firmer price pressures. Adding food and energy prices back into the mix likely showed faster price increases, at a 0.5% MoM pace, as the OPEC+ announcement to cut oil production fed through to higher prices at the pump.”

Citi

“We expect a 0.435% MoM increase in core CPI in April, technically rounding to 0.4%. After the start of long-awaited moderation in shelter prices in March, monthly CPI prints will be particularly sensitive to a more uncertain path for shelter prices over the coming months. Shelter prices should continue to slow on average over the coming months, although the MoM path is unlikely to be smooth. We pencil a 0.62% MoM increase in primary rents and a 0.57% increase in owners’ equivalent rent in April, still stronger increases than in March. Headline CPI should rise 0.5% MoM as energy prices rebound with rising retail gas prices.”

Wells Fargo

“We estimate that annual growth in the headline index held steady at 5.0% in April, as higher gas prices likely led the monthly CPI growth rate to pick up to 0.4%. We do not expect that consumers found much relief in core goods and services prices either. Our forecast suggests that core inflation remained elevated at 0.4% over the month, amounting to a 5.5% annual inflation rate. As we have been saying for some time now, we expect that slowing economic activity will trigger a material deceleration in inflation, but the path back to 2% will be long and bumpy.”

Deutsche Bank

“We expect headline and core to come in at +0.3% MoM (vs +0.1% and +0.4% in March, respectively).”