Will US CPI Cool Down in April? Wall Street Cries Out: "The Inflation Storm" is Still to Come, as Early as Next Month!

The market breathed a sigh of relief after the latest US CPI data "came in positive." However, top analysts on Wall Street reminded investors that the impact of the "trade war" had not yet been reflected in the data, and prices could see a new surge in the coming months.

Earlier on Tuesday, the monthly Consumer Price Index (CPI) report released by the US Bureau of Labor Statistics showed an unexpected cooling of inflation in the US. The data revealed that the US CPI rose 0.2% MoM and 2.3% YoY in April, both lower than market expectations of 0.3% and 2.4%, respectively.

However, Wall Street warned that consumers could face another round of inflation in the coming months. Firstly, data sampling is relatively lagging, and it takes time for it to appear in official statistics. Meanwhile, companies also stockpiled significant inventory in Q1 to avoid tariff-related costs, so there was no price surge caused by widespread shortages.

Morgan Stanley pointed out that the surge in forward imports of consumer goods during the quarter was nearly 30%. Ellen Zentner, the bank's chief economist for its wealth management division, said, "This number doesn't matter because the impact of tariffs will start to show up in the data as early as next month."

"And higher numbers in next month's CPI data mean that for consumers, prices will start to rise as early as this month," he said.

Rick Rieder, chief investment officer of global fixed income and head of the global allocation investment team at BlackRock, also expressed his belief that the impact of tariffs on inflation would "escalate" during the summer months. He wrote in a report on Tuesday that currently, there is little evidence that tariffs have affected inflation, except for a slight increase in car prices.

John Kerschner, head of US securitized products and portfolio manager at Janus Henderson, also said he believes that inflationary pressure from tariffs may start to emerge in June.

"Therefore, the market will hold its breath for these data to determine our actual stance on tariff-induced price increases," he wrote in a report.

Jeremy Siegel, a finance professor at the Wharton School, the world's second to none business school, also speculated that prices could rise in the coming months.

"Again, I think we won't see the impact of tariffs until June or July. Because currently, very few things are actually entering the country, then priced at the retail level, and later sampled by government officials (before being included in statistics)," he said.

Analysts from Bank of America wrote after the CPI release, "There may be hints of tariffs in the data, as prices for some heavily imported goods—home furnishings, pharmaceuticals, IT goods, and toys—accelerated this month. However, we still expect clearer evidence in the coming months."

Goldman Sachs estimated that by the end of this year, the US Fed's preferred inflation measure—core personal consumption expenditures (PCE) inflation rate—could rise from 2.6% in March to 3.6%.

The bank wrote in a report, "Our forecast reflects a sharp acceleration in prices for most core goods categories. We believe tariffs will lead to the fastest price increases in consumer electronics, automobiles, and apparel."