U.S. Headline Inflation Forecast to Hit 3-Year High in May at 4.2%, RBC Economics Says

According to RBC Economics, U.S. headline inflation is expected to rise 0.5% month-over-month in May, reaching a 3-year high with a year-over-year pace of 4.2%. Core inflation, which excludes volatile food and energy prices, is forecast to increase 0.3% month-over-month, pushing annual core inflation to 2.9%, above the Federal Reserve's 2% target. Higher energy and food prices are driving the acceleration. While higher inflation pressures consumers, RBC noted that businesses retain enough pricing power to preserve profit margins, reducing the likelihood of widespread layoffs and supporting the labor market.
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