The Consumer Price Index (CPI) is a measure of the average change in prices over time of goods and services purchased by households. It is an important economic indicator that helps policymakers and investors understand the level of inflation in the economy. The US CPI is released monthly by the Bureau of Labor Statistics (BLS), and the upcoming release is highly anticipated by market participants.
According to Forexlive, a leading financial news and analysis website, the upcoming US CPI release is expected to show a rise in categories excluding energy and food. This is significant because energy and food prices are known to be volatile and can distort the overall inflation picture. By excluding these categories, economists can get a better sense of underlying inflation trends.
The consensus forecast for the US CPI for May 2021 is 0.4%, which would be a slight increase from the previous month’s reading of 0.3%. However, the core CPI, which excludes food and energy prices, is expected to rise by 0.5%, which would be the largest monthly increase since 1982.
There are several factors driving this expected increase in core CPI. One is the reopening of the economy as COVID-19 restrictions are lifted and businesses resume operations. This has led to increased demand for goods and services, which can put upward pressure on prices.
Another factor is supply chain disruptions, which have been caused by a variety of factors including shipping delays, shortages of raw materials, and labor shortages. These disruptions have led to higher costs for businesses, which can be passed on to consumers in the form of higher prices.
Finally, there is also concern about rising inflation expectations, which can become self-fulfilling if consumers and businesses start to anticipate higher prices and adjust their behavior accordingly. This can lead to a spiral of rising prices and wages that can be difficult to control.
Overall, the upcoming US CPI release is likely to be closely watched by investors and policymakers alike. A higher-than-expected reading could lead to concerns about inflation and potentially impact financial markets. On the other hand, a lower-than-expected reading could ease concerns and provide some relief to investors. Regardless of the outcome, it is clear that inflation will continue to be an important issue for the US economy in the coming months.
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- Source: Plato Data Intelligence.