US: Core PCE to increase 0.132% m-o-m in April - Nomura

Incorporating relevant components from April’s CPI, PPI and import price releases, analysts at Nomura expect US core PCE to increase 0.132% m-o-m in April, lowering its 12-month rate to 1.8% (1.830%), from 1.9% (1.882%) previously.

Key Quotes

“The further slowdown in m-o-m core PCE inflation, from 0.15% m-o-m in March, is driven by weakness in PPI’s medical care services, financial services and airline fare prices. We continue to expect core PCE inflation to pick up only gradually over the forecast horizon after base effects help drive up the y-o-y rate 0.3pp in March.”

“For non-core components, we expect a steady 0.3% m-o-m increase in food prices, consistent with April’s CPI data, while energy prices likely rose 1.5% m-o-m as retail gasoline prices picked up during the month. Altogether, we expect a 0.2% (0.195%) m-om increase in the PCE index in April, corresponding to 2.0% (1.987%) y-o-y.”