US: May PPI data slightly negative for core PCE inflation – Nomura
|Analysts at Nomura note that the US headline PPI rose 0.5% m-o-m in May, higher than market expectations (Consensus: 0.3%), but most of the increase was attributable to volatile components such as energy (+4.6%) and trade services (+0.9%).
Key Quotes
“Excluding food, energy and trade services, "core" PPI showed a moderate increase of 0.1% (Consensus: 0.2%). Both processed and unprocessed intermediate goods prices rose steadily by 1.5% and 2.5% m-o-m, respectively.”
“The implications of PPI to core PCE inflation
The decline in the May PPI data suggests that some of the large increases in prior months have been reversed. Moreover, revisions to the previous months were unusually large.
A potential downward revision to the estimate of hospital services prices in February would exert further downward pressure on core PCE y-o-y inflation.”
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