Economists estimate CPI climbed 0.2% month-over-month or 2.0% year-over-year in May. Excluding food and energy prices, they estimate core CPI rose by 0.2% and 1.9% respectively.
"The year-to-year figures have risen abruptly in recent months, but that mostly represents basis effects, as the year-ago figures were extremely soft," said Citi's Peter D'Antonio. "We don't think there has been a sudden change in the underlying path of inflation. Note: Food prices have shot higher in the past three months. We believe this was a lagged response to the drought. Higher feed prices caused livestock owners to cull their herds, which in turn has tightened the market for meats (resulting in higher prices). In the past three months, food prices have increased by 1.5%, driven by a 4.0% jump in meat prices."