Calculated Risk: CPI Preview

by Calculated Risk on 6/10/2025 11:55:00 AM

The Consumer Price Index for May is scheduled to be released tomorrow. The consensus is for a 0.2% increase in CPI, and a 0.3% increase in core CPI. The consensus is for CPI to be up 2.5% year-over-year (YoY), and core CPI to be up 2.9% YoY.

From Goldman Sachs economists:

We expect a 0.25% increase in May core CPI (vs. +0.3% consensus), corresponding to a year-over-year rate of 2.89% (vs. +2.9% consensus). We expect a 0.17% increase in headline CPI (vs. +0.2% consensus), reflecting higher food prices (+0.4%) and but sharply lower energy prices (-1.2%). …

Going forward, the impact of tariffs will likely provide a somewhat larger boost to monthly inflation, and we expect monthly core CPI inflation of around 0.35% over the next few months. Our forecast reflects a sharp acceleration in most core goods categories but limited impact on core services inflation, at least in the near term. Aside from tariff effects, we expect underlying trend inflation to fall further this year, reflecting shrinking contributions from the auto, housing rental, and labor markets. We expect year-over-year core CPI inflation of +3.5% and core PCE inflation of +3.6% in December 2025.

From BofA:

For the May CPI report, we forecast headline CPI rose by 0.2% m/m (0.16% unrounded)
which would push the y/y rate up a tenth to 2.4%. Core inflation, meanwhile, likely will
print at a firm 0.2% m/m (0.24% unrounded). This would result in the y/y rate increasing
from 2.8% to 2.9%. We expect to see more signs of tariffs driving prices higher, but
favorable seasonal factors for autos and declines in certain services categories will keep
a lid on the top line inflation numbers.

Note that month-to-month inflation was soft in May and June 2024.

Click on graph for larger image.

This graph shows the month-to-month change in both headline and core inflation since January 2024.

The circled area is the change for last May and June when inflation was soft. So even somewhat benign readings over the next two months will push up year-over-year inflation. Then the tariff related inflation will start to kick in.