MNI US CPI Preview: More Than Just An Energy Story

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Executive Summary

• Inflation is expected to stay elevated in April, with MNI unrounded consensus pointing to 0.56% M/M for headline CPI (a slight softening vs March) and 0.36% M/M for core CPI (a sequential acceleration), pushing Y/Y inflation higher and further away from the Fed’s 2% target.
• Unsurprisingly, energy is expected to remain the main driver of headline inflation, as higher oil and gasoline prices tied to the Middle East conflict continue to lift prices, though the April increase is expected to be smaller than March’s spike.
• But it’s not just an energy story. Food prices are expected to pickup (potentially reflecting MidEast conflict supply-chain related issues), and core inflation is also expected to firm, with continued upside pressure from tariffs still seen having an impact.
• Important core contributors include airfares and used cars, while softer lodging and apparel prices may offset some of the upward pressure; supply-chain stress and semiconductor shortages are also adding to goods price risks.
• Part of the core pickup is attributable to a temporary statistical quirk tied to the 2025 government shutdown, which is likely to cause a one-off jump in housing inflation. That could put a little more focus on supercore (ex-housing services) inflation, for which there is a very wide range of estimates.
• The breakdown of the above translates into slightly lower early estimates for April core PCE vs CPI, with a median of 0.26% M/M (range 0.22-0.28%), a relatively steady outturn seen from March’s 0.29%.
• With recent data suggesting lessened downside risks to the labor market, FOMC officials are likely to increase their focus on inflation. Recent commentary has emphasized upside inflation risks from energy, tariffs, and broader price pressures, making near-term rate cuts look less likely and the market seeing a modest hiking bias in 2027 but ultimately with the Fed on hold for the foreseeable future.