Bank of America (NYSE:BAC) economists anticipate that headline inflation will decline to its most modest levels since March 2021.

According to Bank of America (BofA), the headline Consumer Price Index (CPI) is projected to rise by 0.3% in June, while the year-over-year rate is expected to decrease by 0.9% to reach 3.1%. The consensus view also indicates a 0.3% month-over-month (MoM) increase.

One of the key drivers behind the forecast for inflation deceleration is a downshift in used car prices.

“The recent decline in headline CPI is also a function of favourable base effects given a surge in energy prices last year,” the economists wrote in a client note.

Core inflation also jumps 0.3% month-over-month, in line with the consensus.

This represents a deceleration from the average monthly pace of 0.4% over the past six months, resulting in a three-tenths decline in the year-over-year rate to 5.0%. Furthermore, it would drive the 3-month annualized rate down to 4.6%, marking the first reading below 5% since September 2021.

Nevertheless, Bank of America economists anticipate that both non-core components of inflation, namely food and energy, will experience month-on-month increases.

“We expect food prices to increase slightly by 0.1% compared to the previous month. This is mainly due to ongoing price hikes in food establishments, as people spend more on dining out. However, recent data shows a decrease in the number of people dining out compared to last year. On the other hand, energy prices are predicted to rise by 0.3% due to higher utility costs like electricity and gas for vehicles.”