Cleveland Fed CPI And PCE Forecast For Next Two Months Is An Inflation Disaster

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The CPI report for April is tomorrow. Here’s a look further ahead.

Month-Over-Month Inflation Nowcast

• April CPI: 0.45 percent

• April Core CPI: 0.21 percent

• April PCE: 0.39 percent

• April Cor PCE: 0.26 percent

• May CPI: 0.42 percent

• May Core CPI: 0.21 percent

• May PCE: 0.38 percent

• May Core PCE: 0.27 percent

Year-Over-Year Inflation Nowcast

• April CPI: 3.56 percent

• April Core CPI: 2.56 percent

• April PCE: 3.73 percent

• April Cor PCE: 3.28 percent

• May CPI: 3.89 percent

• May Core CPI: 2.61 percent

• May PCE: 3.93 percent

• May Core PCE: 3.32 percent

The core numbers exclude food and energy.

The Fed’s preferred measure of inflation is PCE, expected to hit 3.93 percent for May, with core PCE at 3.32 percent.

Baptism of Fire Coming Up

The May PCE numbers are due June 10. That’s just in time for Kevin Warsh’s first FOMC meeting as Fed Chair.

Trump expects Warsh to deliver a rate cut. I believe the Fed bias will be shift to tighten from neutral.

Warsh’s first press conference rates to be a real hoot.

The even bigger hoot will come from President Trump immediately following the FOMC decision.

Tomorrow we have the April CPI numbers. The flames get hotter in May.

Every day the strait does not open is another day of positive price inflation pressures. If the strait is closed for another month, I think we have an inflation and an energy disaster.

For discussion, please see Oil Market Will Lose 100 Million Barrels a Week if Hormuz Remains Closed

Trump’s Three Losing Options

1. War with unknown consequences

2. A humiliating deal that lets oil pass through while negotiations continue

3. Status quo and rising inflation, gasoline prices, fertilizer prices, diesel, etc.

So which is it?

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