The May CPI report, due on Wednesday at 8:30am, will be the first that gives us a sense of magnitude, not just timing of inflation, if any. As Goldman's Paolo Schiavone writes, tariff-related inflation impacts will be closely watched, and while only 10–20% of the CPI basket will be directly affected, pricing power and behavioral responses could broaden the impact. We'll get into the market implication in a second, but for now...
Expectations:
- The M/M print is expected at 0.2%, matching the prior pace.
- Headline CPI is expected to rise by 2.5% Y/Y, vs the April read of 2.3%, with forecasts ranging between 2.2-2.7%.
