FX

US: Headline CPI likely to drop to 0.2% MoM in April – Scotiabank

Analysts at Scotiabank offer a sneak peek at what to expect from Wednesday’s US CPI release, with any rise likely to be transitory.

Key quotes

“Base effects on their own would drive inflation from 2.6% to 3.3% y/y and core from 1.6% to 2.1%.” 

“Supply chain pressures and seasonal influences on month-over-month price changes account for the rest.”

“Such peaks-and the next month could see headline cross 4%-may be transitory, but we should be careful and not go too far with that view. Supply chains are badly damaged by the pandemic and, before that, the prior US administration’s trade wars. Some capacity in the economy may never come back if behavior has been fundamentally altered away from demand for some types of activities toward other types that are unprepared. Some unemployed labor may be structural in nature. Demand for semiconductors and other components is so strong that various industry representatives suggest shortages could persist for years. “

“The Fed seems to have much greater conviction that inflation will fall back than is merited by its track record at forecasting inflation.”

Read: US Consumer Price Index April Preview: The two base effects of inflation

Articles You May Like

USD/JPY leans bullish above 134.00, traces firmer yields ahead of Fed Minutes
Pound Sterling Price News and Forecast: GBP/USD treads water ahead of critical UK data releases
Oil rises as IEA hikes 2022 demand growth forecast
The JPY is the strongest and the NZD is the weakest as the NA session begins
Goldman sees a ‘feasible but difficult path’ for the Fed to defeat inflation without a recession

Leave a Reply

Your email address will not be published.