US CPI data expected to show slight uptick as markets monitor tariff impact on prices
- The US Consumer Price Index is expected to rise 2.5% YoY in May, at a stronger pace than it did in April.
- The annual core CPI inflation is forecast to tick up to 2.9%.
- May’s inflation data could impact the Fed’s policy outlook, rocking the US Dollar.
The Consumer Price Index (CPI) data for May is expected to highlight a pickup in inflation in the United States (US). Investors will scrutinize the details of the report to see whether US President Donald Trump’s new tariff regime is ramping up price pressures, which could have significant implications for the Federal Reserve’s (Fed) policy outlook.
The US Bureau of Labor Statistics is due to publish the CPI data for May on Wednesday at 12:30 GMT. The immediate market reaction could drive the US Dollar’s (USD) valuation.
What to expect in the next CPI data report?
As measured by the change in the CPI, inflation in the US is forecast to rise at an annual rate of 2.5% in May, at a stronger rate than the 2.3% increase recorded in April. The core CPI inflation, which excludes the volatile food and energy categories, is expected to rise 2.9% YoY, against the 2.8% growth reported in the previous month.
On a monthly basis, the CPI and the core CPI are projected to rise by 0.2% and 0.3%, respectively.
Previewing the report, analysts at TD Securities said: “Core CPI inflation likely stayed unchanged in May, posting a 0.23% m/m increase. We expect still soft travel services prices to keep the series under control, as signs of tariffs pass-through start to emerge.”
“Headline CPI inflation likely lost speed, owing partly to a large retreat in gas prices. We pencil in headline and core CPI inflation at 2.4% and 2.9% y/y, respectively,” they added.
