Bank of America forecasts US April CPI at 0.5% on energy surge

Investing.com -- Bank of America expects headline Consumer Price Index to rise 0.5% month-over-month in April, driven primarily by a 4.3% monthly increase in energy prices linked to the Iran war effects. The year-over-year headline CPI is projected to reach 3.7%.

Core CPI is forecast to increase 0.3% month-over-month, bringing the year-over-year rate to 2.7%. The bank attributes this rise partly to rent data adjustments following last year's government shutdown, which prevented the Bureau of Labor Statistics from collecting October CPI data.

The shutdown forced the BLS to use carry-forward imputation for rent and owner's equivalent rent. Because rent panels are conducted every six months, April rent data will be compared against last April rather than last October, likely producing higher readings for both rent and owner's equivalent rent.

Bank of America projects core services to accelerate to 0.39% month-over-month in April from 0.23% in March. Medical services, which rose just 0.01% last month compared to a six-month average of 0.29%, are expected to revert to trend. The semiannual health insurance inflation update is not expected to materially affect the numbers.

Core goods prices are forecast to remain flat in April, with projected declines in apparel and medical goods. Apparel prices surged at an 11% annualized rate in the three months ending March, but the bank expects a slight reversal following the February rollback of IEEPA tariffs.

The bank sees upside risks to both headline and core inflation forecasts. Food inflation poses the primary risk to headline CPI, with potential for greater reversion from last month than projected. Core goods may print firmer if the anticipated apparel decline fails to materialize.

Based on CPI forecasts and financial services assumptions, Bank of America's initial core Personal Consumption Expenditures forecast stands at 0.23% month-over-month for April, which would leave year-over-year inflation unchanged at 3.2%.

You May Also Be Interested In

• Trump: everybody is fully aware that Iran will agree to have major weapons inspections in order to ensure "nuclear honesty" long into future
• Chevron, Microsoft strike 20-year deal to power massive AI data center
• Micron surges 5.5% on blockbuster Anthropic AI deal ahead of earnings