April CPI and PPI Could Top 3.5% as Ppi Report Looms
April headline inflation is expected to top 3.5% year over year in the ppi report week, with Tuesday’s CPI and Wednesday’s PPI both pointing higher. Dr Ed Yardeni wrote, "The week ahead is dominated by inflation reports, with both April headline CPI (Tue) and PPI (Wed) expected to push above 3.5% y/y" in his May 11-15 economic note.
The immediate consequence is a harder case for faster rate cuts. If those readings land near forecast, traders and policymakers will have to weigh firmer prices against the labor market data that has already kept the Fed cautious.
Yardeni’s 3.5% inflation call
3.56% year over year is the Cleveland Fed Inflation Nowcasting model’s Tuesday projection for headline CPI, up from 3.30% in March. The same model sees monthly headline CPI rising 0.45%, while core CPI is expected to rise 0.21% month over month and edge down to 2.56% year over year from 2.60%.
3.89% year over year is the model’s preliminary May read for headline inflation. That puts the pressure on any case for quick easing: the market is not getting a clean disinflation signal, and the inflation backdrop is still running well above the Fed’s 2% target.
Gasoline, prices paid, retail demand
$4.58 per gallon was the average national retail gasoline price last week, while nearby gasoline futures rose to $3.53. Those fuel moves feed directly into the CPI print that lands Tuesday, and they help explain why the headline number is expected to stay elevated even before Wednesday’s producer-price report.
155.3 was the April reading for the ISM Prices-Paid Index, the highest since December 2022. Redbook same-store sales rose 7.8% year over year for the week of May 1, a sign that consumer spending is still active even as price pressure stays sticky.
Powell, Warsh and the Fed
200,000 initial jobless claims for the week of May 1 and 1,766,000 continuing claims show a labor market that is not breaking sharply enough to force the Fed’s hand. Friday’s payroll report also beat expectations, and the six-month average gain in payrolls climbed to 55,000 in April, leaving policymakers with less urgency to ease while inflation stays elevated.
Jerome Powell’s term as chair ends on Friday, and Kevin Warsh is expected to be appointed Fed chair when that term ends. The appointment question lands in the same week as the inflation data, the Trump-Xi meeting on Thursday and Friday, and April retail sales on Thursday, all of which can shape how aggressively the Fed can move after these price readings.
S&P 500 earnings and 7,398.93
7,398.93 was where the S&P 500 closed Friday, 9.2% above its 200-day moving average. Companies representing 1% of the index’s market cap report this week, with another 12% due the following week, and analysts’ consensus Q1-2026 earnings forecasts for S&P 500 companies in aggregate call for 18.0% growth year over year.
24.0% is the full-year 2026 growth estimate, with 14.9% expected in 2027. If April CPI and PPI both come in above 3.5% year over year, the market may have to price a slower path to easier policy just as earnings season broadens and April industrial production lands on Friday.
