May US CPI report undershot estimates

<p><strong> Today’s May US CPI report undershot estimates</strong> with -0.1% headline and core price declines, following a big -0.8% April headline drop with a record -0.4% core price decline for a series that extends back to 1947. May CPI declines were rounded from -0.052% for the headline and -0.060% for the core. Another big drop has been seen for apparel prices, of -2.3%, after a -4.7% April plunge and a -2.0% drop in March. This component has contributed significantly to the CPI under-performance since March. Headline and core price weakness shows that the demand shock from closed retail establishments has dominated the supply shocks from supply chain disruptions, though prices will face a June updraft as supply factors become more important, and oil prices rebound.</p>
<p>Transportation prices declined -1.8%, from -5.9% previously. Hence we’re starting to see some of the varying effects from the easing in oil price weakness, with some emerging pressures from supply disruptions.</p>
<p>In June, an upturn for CPI is expected, with a 0.4% headline bounce and a 0.1% core price gain, with an assumed 8% gasoline price increase. The y/y CPI gain should rise to 0.6% from today’s 0.1% y/y May reading. The y/y core price gain should fall to 1.0% from 1.2% in May. This would leave a headline drop in the y/y metric to 0.3% from 0.5%, alongside a y/y core PCE pull-back to 0.9% from 1.0%. The y/y headline gain should sit in the 0.4% area in Q3, while y/y core price gains hover around 0.6%.</p>
<p>The <strong>Dollar</strong> has printed a tick higher after the CPI data, however the USDIndex remains at the low 96 area. <strong>EURUSD</strong> idles near <span><strong>1.1370</strong></span>, off recent highs, while <strong>USDJPY</strong> was a few points lower under <strong><span>107.40</span></strong>.</p>
<p><strong>Click </strong><a href="https://www.hotforex.com/en/trading-tools/economic-calendar.html"><strong>here</strong></a><strong> to access the HotForex Economic Calendar</strong></p>
<p><strong>Andria Pichidi</strong></p>
<p><strong>Market Analyst</strong></p>
<p><strong>Disclaimer: </strong>This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.</p>