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April's upside inflation surprise is unlikely to be repeated in May, at least on a month-on-month basis. CPI is set to grow 0.5% following a 0.8% gain in April, according to Bloomberg. But from a year earlier, CPI is forecast to increase 4.7% - the fastest since 2008 (and up from 4.2% in April).

  • Prices for categories like airfare and hotel stays, hit hard by pandemic shutdowns, are expected to have continued increasing during the re-opening. Goods prices are also set to increase, driven by supply chain disruptions and materials and worker shortages.

Ex-food and energy prices will be watched even more keenly. Bloomberg survey median for core is +0.5%, average 0.46%.The sell-side high estimate is 0.7%; the low is 0.2% (see chart), with a standard deviation of 0.16% - so in theory, a slight miss shouldn't be too much of a surprise. Though even a print in line with expectations would get Y/Y well above 3.0% for the first time since the mid-1990s.

  • The dispersion in forecasts for the core elements is explained by analysts' varying expectations for both macro and micro factors, with those on the low end (e.g. Scotiabank) seeing more limited passthrough of prices to consumers than we saw in April; those on the upside (e.g. TD) see continued surges in key individual categories such as travel prices.

BBG Core CPI % M/M Forecast DistributionSource: Bloomberg Survey