Apr 2025 CPI Forecast

Tuesday at 8:30 am ET, we will get the Apr CPI. CPI is one of the 2 most important macro prints each month (the other one is the Employment Report), but this month's CPI might be even more important because it could determine when the Fed resumes cutting rates.

In light of the Apr 2 reciprocal tariffs, their subsequent 90-day pause, high China tariffs, and sectoral tariffs, everyone is anxious to get a better understanding of how that is going to affect CPI. Apr CPI might be the first clue in the tariff-inflation puzzle.

In Q1 2025, headline CPI printed at +0.2% MoM on average, which is -0.1 pp better than in Q4 2024. Mar 2025 was exceptionally cool, perhaps even too cool, given that it came in at -0.1% MoM, the largest MoM deflation since the last recession. The last 2 months came in -0.1 pp cooler than consensus expectations on average.

On average, core CPI in Q1 2025 was also +0.2% MoM, which is -0.1 pp below Q4 2024 average MoM figures. Core CPI at +0.1% MoM was also exceptionally cool in Mar 2025, showing the lowest figure since early 2021. The last 2 months were -0.2 pp cooler than consensus expectations on average.

My average error for estimating headline CPI (based on the last 26 CPI estimates from Feb 2023 - Mar 2025) is almost perfect at -1 bps (-0.01 pp).

More importantly, my headline CPI estimates have been closer to the actual number than the average Wall Street estimates by 2 bps on average, 15 times in the last 22 months, or 68% of the time.

My average error for estimating core CPI (based on the last 26 core CPI estimates from Feb 2023 - Mar 2025) is almost perfect at -1 bps (-0.02 pp).

My core CPI estimates have been closer to the actual number than the average Wall Street estimates by 1 bps on average, 15 times in the last 22 months, or 68% of the time.

For public links to my prior CPI estimates, go to ArkominaResearch.com.

The market is currently expecting a pause in Jun and a 25-bps cut in Jul. However, throughout this year, the market has expected a cut to come at the Fed’s 2nd meeting, and after we got the data, expectations were gradually pushed back and kept signaling a cut to come at the Fed’s 2nd meeting. Will this happen again? Time (data) will tell. If the Apr CPI comes in cooler than expected, the Jul meeting might remain live, or expectations could even be brought forward. If CPI comes in hotter than expected, then it could be that the market pushes back the cut expectations further. So, where will the upcoming CPI print at?

My Apr CPI estimates are…

• Headline CPI

  • +0.2% MoM (-0.1 pp lower than consensus, but close to the Cleveland Fed)

  • +2.3% YoY (-0.1 pp lower than consensus and the same as the Cleveland Fed)

• Core CPI

  • +0.2% MoM (-0.1 lower than consensus and close to the Cleveland Fed)

  • +2.8% YoY (there are no consensus estimates available yet, and my estimates are close to the Cleveland Fed)

My unrounded estimates:

If the Apr CPI comes in line with my estimates, this would mean that inflation is a bit cooler than both the Fed and the market currently expect. However, that alone may not get us closer to a Jul cut. To get a better understanding of when the Fed might make its next cut, we will need to wait for the May Employment Report.

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If you’re interested in learning my longer-term CPI estimates (until the end of H1 2026), consider subscribing to Marko’s CPI Report, which goes out each month before CPI and, among other things, contains analyses of:

1. Comprehensive analysis of CPI data

2. Forward-looking inflation indicators

3. Detailed Apr CPI estimate

4. Headline and core CPI trajectory until the end of H1 2026

5. Preliminary May CPI estimate

To get Marko’s CPI Report, make sure to subscribe to Arkomina Research Pro Investor at this link: ArkominaResearch.com/Subscriptions/

By subscribing to Pro Investor, you also get:

1. Marko’s Brain Daily: Sent each trading day around 6 am ET, covering prior-day macro indicators and events (e.g., Fed speeches, meetings), daily estimates for key indicators with market reaction scenarios, short-term equity and bond market outlooks, plus earnings, tariff analyses, and more.

2. Marko’s Fed Report: Delivered before each Fed meeting and, among other things, includes analyses of what the Fed has done so far, what they will do at their next meeting, a detailed economic situation, analysis of monetary policy lags, predcitions about what the Fed will likely do over the next 4 quarters, and the unemployment rate and PCE inflation trajectories over the next 4 quarters.

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These articles are for discussion and educational purposes only.

Past performance is no guarantee of future results.

Although specific securities and economic forecasts may be discussed in articles, you should NOT construe any comment as a call to buy or sell any security or as legal, tax, investment, financial, or other advice. Consult your own advisors if you require such advice.

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