Energy, food, rent and health care costs are all expected to go up in May.
The consumer price index is expected to go up in May. That would work out to an 8.3% rate over the course of the year, the same rate as April. The report is released at the same time every year. The time is Friday.
Core inflation is the measure when energy and food aren't included. The consumer price index is expected to rise in the coming year. In April, that was 0.6%, or 6.2% on a year-over- year basis.
It's a very troubling number. Mark Zandi is chief economist at Moody's Analytics. I think we reached our peak. It was 8% in the first quarter of the year.
In March, the year-over-year inflation rate was 8.5%.
Sarah House doesn't think oil prices have peaked and she doesn't think inflation has either. She expects the inflation rate to go up in May.
Over the last few weeks, our view changed due to that. We've seen gasoline go up. What is preventing the peak from being behind us is the energy sector. The average price for a gallon of gas in the US was $4.97 on Thursday.
Since inflation has peaked, the market has been focused on how aggressive the Federal Reserve will be with interest rate hikes.
The target funds rate is expected to be raised by half a point in July. The pace is slower after that. The market was pricing in a hike of 50 basis points in September. A percentage point is equal to one basis point.
The May inflation report is likely to show that the Fed isn't getting any closer to price stability. It is not reaching its peak.
The consumer price index is expected to stay at current levels for a while. She said that they aren't likely to see a meaningful deceleration until the fall.
At the same time as he expects another hot report for May, Aditya Bhave, senior U.S. and global economist at Bank of America, sees inflation peaking.
We peaked over the course of a year. The point is that we are on the way down. The point is where do we land according to the Fed.
Bhave expects core PCE inflation to fall to 4% by the end of this year and to 3% by the end of next year. Personal consumption expenditures are known as PCE. In the month of April, core PCE inflation was 4.9%.
He expects the headline and core to rise.
He said that the headline was pushed by energy prices. The increases are expected to be broad based. Over the last few months, we've seen this trend. The inflation story isn't just a goods supply story anymore. It is much more broad.
Shelter and medical services should increase in size. The shelter makes up a third of the total.
The outlook for inflation is dependent on the price of oil. He said that supply chains feel like they're starting to iron themselves out. There's inventory all over the place. Pressure on goods prices should be reduced by that. The vehicle prices seem to be rolling over.
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