We forecast a 0.2% increase in the CPI in May

We expect the consumer price index (CPI) to rise by 0.2% month-on-month in May. Based on this forecast, headline inflation will measure 3.6%, up from 3.3% in April.


Summary

  • We forecast a 0.2% rise in the CPI in May

  • Headline inflation will rise to 3.6%

  • Petrol, food, housewares among upward-pushing items

  • Marginal rise in imputed rent

  • Airfares fall somewhat

  • Slight improvement in inflation outlook

  • Inflation 2.8% in 2019 and 2.7% in 2020

We expect the consumer price index (CPI) to rise by 0.2% month-on-month in May.Based on this forecast, headline inflation will measure 3.6%, up from 3.3% in April.The medium-term inflation outlook has improved marginally since the last forecast, owing to a more favourable outlook for wage developments in 2019 and the prospect of weaker-than-expected house price inflation in coming quarters. Inflation appears set to average 3.4% in Q2/2019 and taper off thereafter. We expect it to measure 2.8% at year-end 2019 and 2.7% at year-end 2020.

Inflation forecast, May 2019

Authors


Jón Bjarki Bentsson


Chief economist

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Bergþóra Baldursdóttir


Analyst

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