- Headline CPI seen accelerating to 3.7% (prev 3.4%)
- Core gauge set for moderate rise
- Economists warn of shelter rebound on distortions
- Fed’s Warsh to push alternative inflation measure
- Data due at 12:30 GMT / 08:30 CEST

By Harry Daniels
LiveSquawk News
@HarryDaniels71

11 May 2026 | 16:30 GMT

The ongoing blockade in the Strait of Hormuz and the increasingly fragile truce between the main Gulf protagonists are expected to remain the key drivers of US inflation in April, according to analysts.

Annual headline CPI is forecast to have accelerated to 3.7% in April from 3.4% previously. On a monthly basis, however, price growth is expected to have slowed by three tenths to 0.6%.

Core CPI, which excludes food and energy, is projected to have risen 2.7% y/y, a tenth above the prior month’s reading.

Economists expect the April CPI to continue to reflect the effects of the Iran conflict. Inflationary pressures stemming from higher energy prices are anticipated to at least temporarily lift PCE price inflation, with analysts warning that spillover effects into core inflation are likely over time. Higher food prices are also expected to contribute to upside pressure on the headline reading.

Looking at the components of core inflation, analysts at Goldman Sachs said they expected mixed auto inflation, reflecting a 0.4% decline in used car prices, a 0.1% increase in new car prices, and a 0.4% rise in car insurance costs.

“We forecast a jump in the shelter categories — a 0.50% increase in the owner equivalent rent (OER) category and a 0.44% increase in the rent category — reflecting the unwind of the downward bias in the index level from missed data collection during the government shutdown.”

The bank explained that the panel group originally scheduled for sampling in October will instead be surveyed in April and compared with prices from 12 months earlier, effectively causing April’s report to capture two months’ worth of increases.

The US–Iran ceasefire has now been in place for approximately 33 days. However, the truce has come under renewed strain in recent days, with reports of loud explosions and vessels in the region being struck by drones. The UAE said it had intercepted several missiles allegedly fired from within Iran.

Meanwhile, the Strait of Hormuz — a critical artery for global oil and gas transport — has remained effectively blocked by both US and Iranian forces since the latest conflict began at the end of February.

Dated Brent — the benchmark for physical, immediate-delivery crude cargoes — surged to roughly USD 144.4/bbl in early April. However, in the week to 11 May, the commodity averaged around USD 104.55/bbl.

With signs of a more prolonged dislocation in oil markets, analysts at Barclays revised their oil price outlook higher last week.

“Given indications that disruptions to key Middle East shipping channels will persist for longer than our prior conditioning assumptions, our oil strategist now assumes that Brent oil will peak at USD 115/bbl in Q2, fading only gradually to USD 100/bbl in Q4, alongside a similarly elevated trajectory for WTI.”

Federal Reserve officials have increasingly stressed the need to look beyond the volatile food and energy components within the CPI report.

Incoming Fed Chair nominee Kevin Warsh said during his confirmation hearing that he would place greater emphasis on measures such as the Dallas Fed trimmed-mean PCE inflation gauge rather than traditional core CPI.

In a client note, Aditya Bhave said: “In our view, the biggest strength of trimmed-mean measures is that they are agnostic on what to exclude. This makes them less volatile than traditional core measures and, in theory, a better gauge of underlying inflation.”

Nonetheless, the analyst cautioned against wholesale adoption of Warsh’s preferred inflation metric.

“Long-term inflation expectations remain anchored, suggesting that markets still view the Fed’s 2% target as credible even though inflation has overshot since March 2021. If the Fed were to shift its focus from core PCE to the Dallas Fed trimmed-mean measure — which is coincidentally 84bp lower than core — markets might view that as cherry-picking and begin to question the Fed’s commitment to its inflation target.”