Ulrich Leuchtmann, Head of FX and Commodity Research at Commerzbank, previews US Consumer Price Index (CPI) report due out today.

The YoY data is of little interest for the current situation

“In view of the volatile development of inflation recently, the majority of market participants are likely to have found out one thing by now: What matters is the month-on-month comparison, not the year-on-year data. In April 2022 the US CPI rose by 0.4% for example. The year-on-year rate will fall if the CPI rose by less than 0.4% this March.”

“That means the year-on-year data constitutes the comparison with an inflation period long in the past, which means it is of little interest for the current situation. The majority of market participants have long since understood that. I think it is an old wives’ tale that the market would still be impressed by base effects like that.