US CPI in focus as key event - Nomura

Analysts at Nomura explained that they expect a 0.2% (0.169%) m-o-m increase in core CPI in April, which translates to 2.2% (2.193%) y-o-y, up from 2.1% in the prior month. In our view, the underlying trend of core CPI is unchanged despite recent volatility in its subcomponents. 

We expect continued weakness in used vehicle prices to contribute to a somewhat soft reading on core goods prices overall. For core service prices, we expect a trend-like increase, bolstered by steady increases in rent inflation although at a lower rate relative to March.

Among non-core components, various energy prices rose strongly. Retail gasoline prices picked up quickly in April as the spring driving season arrived. Further, heating oil and natural gas prices likely picked up after sharp declines in March. Thus, we expect a solid rebound in CPI energy prices in April. In addition, based on prices received at farms, prices of food at home likely rose firmly. Moreover, considering the continued labor shortage in the restaurant industry, we anticipate steady increase in prices of food consumed away from home. Altogether, we forecast a 0.3% (0.313%) m-o-m in aggregate CPI for April, which translates to 2.5% (2.545%) on a 12-month change basis. Our forecast for CPI NSA is 250.747."