US markets are awaiting the release of inflation data tomorrow, Wednesday, amid expectations of a new rise in the consumer price index as pressure continues on the cost of living.
Wall Street estimates indicate that inflation may record 4.2% on an annual basis, driven by an expected monthly increase of 0.5% during May, which means exceeding the 4% level for the first time since May 2023, and reaching the highest level since April of the same year.
Part of the rise in the general index, which was at 2.4% a year ago, is due to the rise in energy prices against the backdrop of the war between Iran and Israel.
It is also expected that the core inflation rate, which excludes food and energy, will reach about 2.9% annually, after a monthly increase of about 0.3% in May, according to Dow Jones data.
Warnings of expanding inflationary pressures are increasing with the continued rise in oil prices and their prolonged effects on the economy, at a time when fears are increasing that inflation will remain at high levels for a longer period than expected.
In this context, Charles Schwab’s chief investment strategist, Liz Ann Saunders, considered that the current pressures are not limited to energy only, but rather include broader factors related to monetary liquidity and developments in the artificial intelligence sector, noting that inflation has become more comprehensive.
She added that any reading that exceeds expectations may increase pressure on stock markets due to investors’ concerns about continued inflation.
She also pointed out that any rapid relief in tensions in the Middle East may not be directly reflected in oil prices, due to continued supply disruptions and the difficulty of quickly returning production to previous levels.
The annual inflation rate recorded 3.8% in April, while core inflation reached 2.8%. The US Bureau of Labor Statistics is scheduled to release the report at 8:30 a.m. EST.
