Economists Durie and Wong say May headline US CPI is likely to be strong, but core inflation—more relevant for the Fed rate outlook—should remain mild, with the month-on-month increase consistent with a 2% target. Supply shocks have pushed up airfares, appliances and electronics, while disinflation in non-essential services suggests consumers are cutting discretionary spending. A muted core print would ease market concern about further Fed hikes after May's stronger-than-expected nonfarm payroll

Economists Durie and Wong say May headline US CPI is likely to be strong, but core inflation—more relevant for the Fed rate outlook—should remain mild, with the month-on-month increase consistent with a 2% target. Supply shocks have pushed up airfares, appliances and electronics, while disinflation in non-essential services suggests consumers are cutting discretionary spending. A muted core print would ease market concern about further Fed hikes after May's stronger-than-expected nonfarm payrolls. The economists still expect a 25bps Fed cut in Q4.