US: Core inflation as expected – Nordea Markets

US core CPI came out at 0.2% m/m in May, unchanged from April and in line with consensus expectations and consequently, core CPI inflation rose to 2.2% y/y from 2.1% y/y in April, notes Kjetil Olsen, Research Analyst at Nordea Markets.

Key Quotes

“Headline CPI also increased 0.2% m/m in May and 2.8% y/y. Higher energy prices are the reason for the high headline inflation.”

“The main driver for the increase in core inflation is core service inflation, reflecting higher wage pressures.”

“Momentum remains close to 2% but there are upside risks ahead. We expect core inflation to reach 2.5% during summer and rise very gradually during the remainder of the year in tandem with a further rise in wage growth due to the strong labour market.”