US CPI Preview: Forecasts from 12 major banks, the first decelerating print in a long time

The US Bureau of Labor Statistics will release the April Consumer Price Index (CPI) data on Wednesday, May 11 at 12:30 GMT and as we get closer to the release time, here are the forecasts by the economists and researchers of 12 major banks regarding the upcoming US inflation print.

On a yearly basis, CPI is expected to edge lower to 8.1% from 8.5% in March. The Core CPI, which excludes volatile food and energy prices, is forecast to fall sharply to 6% from 6.5%. 

Commerzbank

“The US inflation rate is likely to have peaked at 8.5% in March. Although consumer prices probably rose quite strongly again in April, by 0.3% from March (consensus 0.2%). However, they had risen much more strongly in April 2021. As this increase now drops out of the year-on-year rate, the latter is likely to fall to 8.2%. A similar effect applies to the core rate, which excludes energy and food. Here we expect a decline from 6.5% to 6.1%.”

Nordea

“We expect the April CPI headline figure to show that inflation fell to c. 8.2 YoY and core inflation to fall to c. 6.2 YoY as we compare prices to last spring’s hefty price increases.”

ING

“Consumer price inflation should hopefully show inflation has passed the peak with the YoY rate slowing from 8.5% to 8.3%, and core inflation edging down to 6.1% from 6.5%. Lower gasoline prices will be a big help, as will a drop in second-hand car prices as heralded by data from the Mannheim car auctions. However, it will be a long slow descent to get to the 2% target. As such, the Fed will continue to hike rates swiftly with 50bp rate hikes expected in June, July and September.”

RBC Economics

“Torrid growth in the US inflation rate likely slowed in April to 8% YoY. This would mark the first decline in almost a year and come on the heels of price growth that soared to 8.5% YoY in March. Further risks to global supply chains from the Russian invasion and China’s lockdowns will continue to add tailwinds to global inflation pressures. With labour markets still exceptionally tight and inflation pressures exceptionally strong, the Fed is expected to continue to act quickly to move interest rates higher. We expect another 50bp hike in June to build on the 50 bps hike (and start of QT tightening) announced last week.”

TDS

“Core prices likely stayed strong in April, regaining momentum to 0.5% MoM after recording 0.3% in March. While used vehicles prices likely declined again, they probably fell less sharply than in the last report. We also look for renewed strength in shelter inflation. Our MoM forecasts imply 8.1%/6.1% YoY for total/core prices, likely confirming March was the peak of the cycle.”

NBF

“The food component likely remained very strong given severe supply constraints globally, but the increase in this segment may have been partially offset by lower gasoline prices. As a result, headline prices may have increased’“only’ 0.2% MoM, allowing the YoY rate to drop four ticks to 8.1%. Core prices, meanwhile, should have continued to be supported by rising rent prices and advanced 0.4%. Thanks to a strongly negative base effect, this healthy gain should still translate into a four-tick drop of the 12-month rate to 6.1%.”

SocGen

“Seasonally-adjusted gasoline prices are expected to have dropped roughly 5% in April. Home heating and electrical costs should dampen the overall energy price boost to the CPI, but the energy component is key to the 0.2% MoM forecast increase. If this is the case, the YoY measure would fall to 8% from 8.5% in March and raise hopes that the CPI peak pace was set last month. The unknowns regarding energy price pressures linger, however, so we are calling the peak at 8.5%, noting that conviction rests on oil and gas price developments. Core CPI is still expected up 0.4% MoM (5.9% YoY), as rent and shelter components contribute a large share of the index, and they are set for a 0.4% increase.”

CIBC

“With gasoline prices easing off in April, and strong year-ago prints from last year’s reopening being lapped, inflation is set to decelerate in April, while still remaining sky high. The 0.2% monthly advance expected for total CPI (8.1% YoY) would mask a strong gain in food prices, reflecting fresh supply chain issues linked to the war in Ukraine. That would also include an acceleration in monthly ex. food and energy prices to 0.4% (6.0% YoY), attributable to renewed supply chain disruptions for goods tied to widespread lockdowns in China, and continued upwards pressure from the cost of shelter and the tightening in the labor market. We are in line with the consensus which should limit any market reaction.”

Deutsche Bank

“We are expecting a 7.9% reading, down from the four-decade-high 8.5% print in March, not least due to base effects. From here it should all be about the pace of the declines as things like the extreme YoY prices in used cars roll out of the data. However, on the other side, it is important to see how prolonged the rise in rents is. Remember that rents make up a third of the CPI basket and 40% of core. Used cars only make up a few percentage points. A reminder that the day-by-day calendar of events is at the end as usual.”

Citibank

“US April CPI MoM – Citi: 0.1%, prior: 1.2%, CPI YoY – Citi: 8.0%, prior: 8.5%; CPI ex Food, Energy MoM – Citi: 0.4%, prior: 0.3%, CPI ex Food, Energy YoY – Citi: 6.0%, prior: 6.5%. After the softer 0.3% MoM rise in core CPI in March, there is discussion around whether US inflation has peaked. The next three months of data points – for April, May, and June – will likely show unfavorable base effects that may see the YoY reading decline from recent highs. However, underlying inflation is likely to remain strong and YoY prints could move higher again by July data.”

Wells Fargo

“In April, we expect CPI rose 0.4% MoM, which would lead the YoY rate to drop to 8.3%, the first decline since July 2021. We expect core CPI to advance 0.5% over the month in April and fall to 6.1% over the year (previously 6.5%).”

ANZ

“We expect US core CPI to have risen 0.5% MoM in April and headline CPI by 0.3%, as food and energy price rises eased. On a YoY basis, core and headline inflation should have eased to 6.1% and 8.2% respectively, suggesting annual inflation may have peaked. Has inflation peaked? It probably has on a YoY basis, but monthly inflation trends remain stubbornly high and above rates consistent with 2% saar.”