MNI DATA PREVIEW: US May Core CPI Expected To Rise 0.2%

By Kevin Kastner

     WASHINGTON (MNI) - The May Consumer Price Index to be released on Wednesday

is expected to rise by 0.1% based on both the Bloomberg consensus and the median

forecast in an MNI survey of analysts. Core CPI is expected to rise 0.2% due to

a modest rebound in apparel prices after two declines.

     Here are some key points to watch for: 

     --Analysts have a tendency to overestimate overall CPI, particularly in the

most recent 10 years. Six overestimates over that period, compared with only two

underestimates and two correct estimates, suggesting that another overestimate

in likely.

     --The accuracy of forecasters is clear for core CPI, with six correct

estimates in the last 10 years compared with only two overestimates and two

underestimates. Even those misses were generally by only 0.1 percentage point, a

common theme for core CPI. 

     --Prices of apparel prices plunged by 1.9% in March on technical factors.

Analysts had expected an April rebound, but apparel prices instead slipped by a

further 0.8%. A rebound in apparel prices is possible in May and presents an

upside factor. 

     --AAA reported a further gain in month/month gasoline prices, but seasonal

adjustment factors will be a negative factor this month as the summer driving

season gets started. The result should be a flat reading for gasoline after

large increases in the previous three months.

     --The forecasted 0.1% gain for overall CPI, if realized, would allow the

year/year rate to dip modestly from the 2.0% rate posted in April. At the same

time, the expected 0.2% gain in core CPI should leave the year/year rate for

that measure at 2.1%. While this rate are above the core PCE price rate, it has

declined in recent months as well, down from the 2.3% recent peak in November.

--MNI Washington Bureau; tel: +1 202-371-2121; email: kevin.kastner@marketnews.com

[TOPICS: MAUPR$,M$U$$$]