The CPI release for tomorrow is expected to show elevated consumer prices, consistent with levels seen in March. Here are the forecasts:
- CPI (YoY): +5.0% expected, matching March's +5.0%
- CPI (MoM): +0.4% expected, up from March's 0.1%
- Core CPI (YoY): +5.5% expected, slightly lower than March's +5.6%
- Core CPI (MoM): +0.4% expected, same as March's +0.4%
One year ago, the CPI rose by 0.4% in April. That gain will be replaced by the 0.4% this year. In April of last year, the core CPI increased by 0.5% (to be replaced by 0.4% if it comes in as expected).
Fed comments keep on going back to the CPI ex shelter. That has continued to move higher despite calls that it would start to move lower. Last month, the shelter component rose 0.6%. (see prior report HERE)
These numbers indicate that inflation remains significantly above the Federal Reserve's 2% target. The Fed has been raising interest rates to address inflation, but there are concerns about pushing the economy into a recession if rates are raised too quickly.
Currently, markets are pricing in an 83% chance that the Federal Reserve keeps rates unchanged in June.