Today's CPI Report Could Reveal Surprising Inflation Drop – Key Numbers to Watch Now!

At 11:30 today, the market is hotly anticipating the May CPI reading to be 0.3%, which signifies little improvement in the year-over-year inflation rate. Some forecasts suggest it will stay at 3.6%, while others predict a slight decrease to 3.5%.

The two major components to monitor are Shelter and Motor Vehicle Insurance. Excluding these, year-over-year inflation only rises by 0.27%, indicating that nearly all inflation stems from these areas.

Shelter reflects rent price increases and owners' equivalent rent, which estimates the rental income of a home you own. This typically aligns closely with rent increases.

Shelter comprises 45% of the core inflation reading, making it the largest component. The May 2023 shelter reading, which drops out of the annual calculation today, is 0.54%, a notably high figure. Recent shelter data has shown signs of moderating over the past few months. If this trend continues or accelerates, it could provide some relief.

Motor Vehicle Insurance constitutes only 3.6% of core inflation. However, its 23% year-over-year increase contributes roughly 25% to the annual inflation rate. The high replacement figure of 1.9% from last year will be excluded from the calculation. If the new figure is lower, this could also alleviate some inflationary pressure.

Bottom Line: I think today’s CPI report is unlikely to have a negative impact and could potentially come in below expectations!

What do you think will happen??

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