In May, the Annual Consumer Price Index (CPI) in the US is projected to show a 4.2% increase, marking a slowdown compared to April's 4.9% rise. The Core CPI inflation, which excludes volatile food and energy prices, is anticipated to grow at a slightly faster pace of 5.6% year on year, surpassing April's 5.5% growth.
The forthcoming release of US CPI inflation data by the US Bureau of Labor Statistics (BLS) on June 13 at 12:30 GMT is expected to have a significant impact on the Federal Reserve's interest rate outlook and the US Dollar markets. As a result, market participants have been closely monitoring the US Dollar's performance ahead of this crucial inflation report, particularly following the mixed May Nonfarm Payrolls report. The recent string of disappointing US economic indicators has reinforced expectations of the Federal Reserve opting for a pause in its interest rate hike trajectory during its upcoming two-day policy meeting.
The outcome of the US CPI inflation data could shed new light on whether the Federal Reserve, the world's most influential central bank, will align with market expectations and pause its tightening cycle. Hence, this highly anticipated economic data release is likely to significantly impact the valuation of the US Dollar.
What should we anticipate in the upcoming CPI data report? According to market consensus, the US Consumer Price Index is expected to rise by 4.2% in May compared to the previous year, indicating a deceleration from April's 4.9% increase. Conversely, the Core CPI, which excludes volatile food and energy prices, is projected to advance at a slightly quicker pace of 5.6%, surpassing April's growth rate of 5.5%.
On a monthly basis, the Consumer Price Index is forecasted to increase by 0.3% in May, following a 0.4% uptick in April. However, the Core CPI is expected to rise by 0.4%, maintaining the same pace as the previous month.