Tuesday's US Inflation Reading Expected at Nearly Three-Year High
April CPI data due Tuesday is expected to show US headline inflation at 3.7% year-on-year, the hottest reading since June 2023. The main drivers are Iran-war oil costs and stickier services prices. The data complicates the Federal Reserve's path on rate cuts.
Economists polled by Reuters expect headline CPI to climb to 3.7% year-on-year in April, with core CPI at 3.5%. The monthly headline reading is forecast at 0.5%, the fastest in three years.
The main driver is gasoline. With Brent crude holding above $100 because of the Iran conflict, retail gasoline is staying north of $4 a gallon. Sticky services categories — rent, insurance and medical care — are also keeping core inflation well above the Fed's 2% target.
The report will be a key input ahead of the Federal Reserve's July meeting. Rate futures currently price the odds of a July cut at under 30%. A hot print could also test Wall Street's recent run of record highs.
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