Energy price weakness likely held back CPI inflation in April while core prices increased by 0.2% m/m. The retail gasoline prices declined by 1.7% m/m during the reference period which includes the first 18 days of the month, estimates Societe Generale. After adjusting for seasonality, the CPIindex for motor fuel should be down 3.5% m/m. Utility prices are also expected to be soft, and the PPI report suggests that the weakness in food prices should persist as well.
However, after excluding food and energy, the CPI is expected to post its fourth consecutive sequential increase of 0.2%. This is likely to be driven by continued firmness in housing and medical costs and a rebound in public transportation, offset by some moderation in vehicle cost inflation, apparel and furnishings.
"Analysts' forecast would push down slightly on the yoy trend, reducing the overall rate of inflation from -0.1% to -0.2% yoy and core inflation from 1.8% to 1.7%. However, inflation should resume its upward trajectory in May, given the sizeable increase in retail gasoline prices. the core CPI is expected to end the year slightly above 2.0%", according to Societe Generale.
