RBC expects U.S. May core CPI to rise 0.3% MoM and to 2.9% YoY, citing ongoing
energy-driven inflation and limited relief in food prices after recent beef-led
increases. Higher aviation fuel and resilient wage growth amid a tight labor
market should sustain core services inflation; core goods inflation is being
supported by new and used vehicle price gains, partly masking weakness in
apparel, personal care and auto parts. ISM manufacturing and services surveys
show sharply rising input costs, and recent PPI suggests firms retain pricing
power; RBC forecasts May headline PPI and core PPI up 0.6% MoM, to 6.3% and 5.5%
YoY respectively. NFIB data show the share of firms planning price increases
over the next three months near 30%, indicating cost pass-through may continue
through the summer and lend further support to inflation in coming months.
