**As seen in Risk In The Week report 05/06/23, cablefxm.co.uk/reports
March consumer prices eased by one full percentage point to 5.0% Y/y, this was slightly below the consensus forecast of 5.1% and marked the 9th consecutive month of slower rates. The core figure accelerated to 5.6% Y/y, this was in line with expectations. As of March, core inflation is rising faster than the headline, we do not see this since January 2021. Over the last 12 months, the March print is one of four downside surprises in the headline CPI, our Cable FX Macro U.S. Inflation Surprise Index is now flat and closer to the lowest percentile in a year. On a monthly basis, consumer prices expanded by 0.1%, the slowest rate since December, the core figure eased to 0.4%. Shelter prices slowed to 0.6% from a prior 0.8%, energy decelerated by 3.5% as gasoline prices slumped by 4.6%, the largest decline since December. Food prices were flat on the month, this was the slowest pace seen since November 2020, the component was dragged by an 11% decline in the price of eggs. Looking ahead, a survey of economic projections compiled by Bloomberg, showed economists expecting headline inflation slowing to 3.2% Y/y by end of the year, this was revised lower from the prior forecast of 3.4%. While this might sound as good news for consumer prices, the same survey does not see inflation moving back into target over the forecast horizon. For the April report, analysts at CIBC said that if there is to be a continuation in core consumer prices, this would reinforce the notion that we will not have rate cuts this year. CIBC noted that the Fed is looking for a slowdown in wage growth and an uptick in the unemployment rate before considering reducing rates, they added that this isn’t likely to happen until 2024, given the strength of the April Non Farm Payrolls report.
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