The Daily Update: US CPI / Is It Coming Home?

Figures released yesterday showed that the US Consumer Price Index (CPI) again moved more than expected, up 0.6% last month after the 0.8% move in April, with the core metric, ex food and energy, posting a 0.7% monthly spike (estimates were for 0.5%). On a year-on-year basis, CPI increased from 4.2% in April to 5% in May, the fastest pace in nearly 13 years. However, May’s CPI brings an end to substantial base effects which are likely to be more neutral in this month and will probably come to an end in the next quarter.

Looking into the figures it's worth noting that prices for food consumed at home were up by 1.3% after supply problems, a cyber-attack on the meat processor JBS had forced it to halt all US operations, whilst labour shortages boosted prices for food away from home. Used car prices were also firm for a third-straight month, jumping another 7.3% after 10.0% in April. In addition to used cars, new car prices were up by 1.6%, the fastest monthly move since 2009, and second fastest pace since the early 1980s. New car deliveries have been hampered by chip shortages, which in turn has led to dealers having to draw down inventories and reduced incentive spending.

Lastly, will it be coming home? We have been waiting a year, but the Euro 2020 soccer championship finally kicks off tonight as Italy faces Turkey in Rome. It is the first of 51 matches in 31 days at 11 venues, from London to Baku and Glasgow to St. Petersburg. France are the favourites (5/1) followed by England (13/2) and Belgium (15/2). However, never rule out the Germans!!

We will issue a prediction of the winner next week based on the 24 teams taking part in this year’s tournament if you were to take their Net Foreign Assets (NFA) as an indication of how they were to perform as we did with the Rugby World Cup.