US: Soft inflation figures – Deutsche Bank

Analysts at Deutsche Bank note that the core US CPI was on the softer side in April at +0.1% mom (vs. +0.2% expected) and the unrounded number was +0.098% so it was also a genuine miss as opposed to just rounding.

Key Quotes

“The monthly reading also meant that the annual rate remained unchanged at +2.1% yoy after expectations were for a lift to +2.2%, while the 6-month annualized rate nudged down to +2.35%. The details of the data showed that weakness was fairly broad based across core goods and core services with the biggest declines coming in airfares and car inflation. It’s worth noting that following the average hourly earnings miss in last week’s payrolls report, that now means that we’ve had two softer than expected US inflation prints in close succession.”

“Combined with the healthcare component of the PPI on Wednesday, the read through for core PCE also looks soft for later this month. We still think higher inflation is inevitable in the US this year but there’s no doubt that the last week increases the risks to our view.”