๐'๐ข ๐ฅ๐๐ฎ๐๐ฃ๐ ๐๐ฉ๐ฉ๐๐ฃ๐ฉ๐๐ค๐ฃ ๐ฉ๐ค ๐๐ ๐พ๐๐ ๐ค๐ฃ ๐๐ช๐๐จ๐๐๐ฎ:
The May 13 CPI reading is anticipated to show a year-over-year increase of approximately 2.3%, which is the median forecast, marking the lowest inflation rate since February 2021. Core CPI, which excludes volatile food and energy prices, is expected to remain steady at 2.8% annually.
Recent tariffs implementations initiated under Trump's reign, will be beginning to influence these readings, but the full impact is expected to reveal itself over the coming months. Potential downside pressure could come from the decline in Oil prices we have seen.
We are much more likely to see a doveish Federal Reserve if we see numbers on Tuesday coming in less than expectations, and I obviously hope we do see CORE dropping under 2.8%. However this is going to have to be paired with weakening job data, which may not happen. The FED have signalled that they are prepared to wait to see how tariffs may impact inflation, but for this week some good results like 2.2% and 2.7% may give us continued bullish momentum.
Here is a graph I have plotted out, clearly showing the sloping downward trend for inflation from the consumer's point of view. FED monetary policy is evidently working, but in my opinion, they need to get rates lower in order to support broader economic growth as the Federal Reserve's restrictive stance may no longer be necessary, especially if there is little to no added inflation from tariffs which I suspect might be the case.
A 2.3% or lower inflation rate for April 2025 would represent a significant milestone, indicating a return to pre-pandemic inflation levels.
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