US CPI Preview: May 2023

The next set of inflation numbers are expected to further dispel the fallacy that the US remains in the grip of a major inflation problem - but will the Fed keep focusing on lagging price indicators?

Executive summary

• May’s US CPI report is expected to reveal significant additional disinflation. My forecasts are as follows:

  • Headline CPI: 4.2% (vs 4.1% consensus, and 4.9% in April)

  • Core CPI: 5.4% (vs 5.3% consensus, and 5.5% in April)

  • Headline CPI ex-shelter: 2.3% (vs 3.4% in April)

  • Core CPI ex-shelter: 3.5% (vs 3.7% in April)

• With the Fed continuing to ar…