About 40% of the recent CPI reading was from energy, 25% from food, and about 10% from tariff price pass through, with the rest being core measures that haven’t really gone crazy yet
What we will likely see in May is an acceleration of GOODS inflation, as consumers start to see cost pass through from business (supported by this month’s PPI reading). This will happen EVEN THOUGH tariff inflation continues to decline (peaked in February; https://www.dallasfed.org/research/economics/2026/0505-mau).
June is when you likely start to see an acceleration of food at home inflation (though it’s possible this starts in May), as this is the start of the peak crop picking season in CA. It’s not impossible we quickly see 2022 level food inflation, which was a tick under 10% (9.9, IIRC).
What’s worse is service inflation; if that doesn’t mitigate or show signs of “demand destruction”, then this means that inflation is getting baked into expectations. And given that the WSJ just noted that this is an issue among investors, this is also likely to happen.
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About 40% of the recent CPI reading was from energy, 25% from food, and about 10% from tariff price pass through, with the rest being core measures that haven’t really gone crazy yet
What we will likely see in May is an acceleration of GOODS inflation, as consumers start to see cost pass through from business (supported by this month’s PPI reading). This will happen EVEN THOUGH tariff inflation continues to decline (peaked in February; https://www.dallasfed.org/research/economics/2026/0505-mau).
June is when you likely start to see an acceleration of food at home inflation (though it’s possible this starts in May), as this is the start of the peak crop picking season in CA. It’s not impossible we quickly see 2022 level food inflation, which was a tick under 10% (9.9, IIRC).
What’s worse is service inflation; if that doesn’t mitigate or show signs of “demand destruction”, then this means that inflation is getting baked into expectations. And given that the WSJ just noted that this is an issue among investors, this is also likely to happen.