CPI Data Expectations: Analyzing May US inflation – by FXstreetNews EconomicIndicator SEO UnitedStates Inflation EURUSD
Annual Consumer Price Index in the US is seen rising 4.2% in May, slowing from April’s 4.9% increase.US CPI inflation data is set to influence the Fed’s rate outlook and stir US Dollar markets. inflation data for May will be published by the US Bureau of Labor Statistics on June 13 at 12:30 GMT.
The US CPI inflation data could influence the Fed’s decision, throwing fresh light on whether the world’s most powerful central bank will meet the market expectations and bring a halt to its tightening cycle. Therefore, this top-tier US economic data release is likely to have a significant bearing on USD valuations.The US Consumer Price Index data, on a yearly basis, is expected by market consensus to rise 4.2% in May, a deceleration when compared with the 4.9% increase recorded in April.
Based on recent Fed communication and sluggish economic performance, the central bank is widely expected to skip a rate hike at this meeting and potentially resort to tightening more later. The recently released US ISM Services PMI and the weekly Initial Jobless Claims data disappointed and raised economic concerns. Expectations for further cooling of US inflationary pressures further cemented a Fed pause this week, with markets pricing roughly 80% probability for the same.
We expect the May CPI, released just ahead of the FOMC meeting, to slow down to 0.2% MoM driven by negative contribution from energy prices. We also forecast Core CPI to continue cooling to 0.3% MoM .The CPI inflation data is slated for release at 12:30 GMT, on May 10. A below-forecast reading, especially in the monthly core inflation, could push back against the market expectations that the Fed could return to tightening later this year after skipping at the June meeting.
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