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May Headline, Core CPI Seen Flat;...>

US DATA PREVIEW
US DATA PREVIEW: May Headline, Core CPI Seen Flat; Downward Risk
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-Wednesday's CPI data will likely show downward pressure from the slowing
decline in fuel prices, drops in auto insurance, and muted demand for goods and
services amid ongoing social-distancing. 
-Strong grocery sales will likely boost food commodity prices, Barclays says,
but restaurant prices should not factor into the report due to lockdowns and
rolling closures. Nomura says ~10% unemployment "should constrain inflation for
a long period of time."
-Goldman Sachs estimates a -0.4% drop in core CPI, reflecting decelerating
shelter prices due to rent freezes/forgiveness alongside a decline in used-car
prices and auto insurance rates. Goldman expects a -0.2% decline in headline CPI
due to fuel prices.
-The CPI release precedes the FOMC decision Wednesday afternoon as the Fed mulls
strategies to bring inflation back to 2%. The FOMC said it expects the overall
effect of Covid-19 to be disinflationary despite supply disruptions.
MNI Washington Bureau | +1 202-371-2121 | jean.yung@marketnews.com
MNI Washington Bureau | +1 202-371-2121 | jean.yung@marketnews.com

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