US inflation numbers will be released later tonight (June 10). If the numbers are high, it will suggest an overheating of the US economy which might give rise to a fear that the US central bank may reconsider its easy, accommodative, loose monetary policy stance.

The non-farm payroll number last week came and went without much fanfare.

The consumer price inflation numbers will also be important because the last reading was a big shocker. April core consumer price rose about 0.9 percent on a month on month (MoM) basis.

The Bloomberg consensus median estimate for the month of May is 0.5 percent rise on MoM basis. The focus of the May release is on the components of core consumer price index (CPI) rather than the core CPI itself.

The US Fed and the various officials in their commentary had categorised the rise in prices of used cars, airfares, hotels etc as likely to be ‘transitory’ in nature. So if the headline number is driven higher by these components, most likely the market will shrug this off.

The Fed officials have also guided that they will be worried about the structural aspects of rising inflation. Most important to watch there are shelter prices – basically rents, which are rising in the US.

If the headline number is propped up in a large way by this component then there will be a bit of a problem.

Watch the accompanying video of CNBC-TV18’s Prashant Nair for more details.

(Edited by : Abhishek Jha)

First Published:Jun 10, 2021 1:13 PM IST