(Bloomberg) — Mohamed El-Erian, who almost a year ago accurately forecast that elevated US inflation would be persistent, says it hasn’t peaked.

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The closely followed bond-market strategist agrees with monthly consensus estimates for May’s consumer price index to be reported on Friday, but told Bloomberg Television’s The Open on Thursday that “what worries me is that the June month-on-month print will be worse than the May month-on-month print. Those who boldly said inflation has peaked and is coming down may have to change their minds.”

Read more: Today’s Price Action Shows US CPI Could Deliver a Nasty Shock

The CPI for April rose 8.3%, down from 8.5% the prior month, but still close to the biggest increase in four decades. Annual inflation likely climbed at an 8.2% pace in May, according to the median projection in a Bloomberg survey ahead of the release Friday. That’s still more than four times the levels seen before the pandemic.

“It wouldn’t surprise me if we see a headline print higher than 8.5%,” though “not as early as next month,” El-Erian said. “Because the drivers of inflation are broadening. At the headline level, energy prices are going up month-on-month quite dramatically. We see pressure on shelter and food. It’s way too early to say inflation has peaked.”

Inflation erodes the value of bonds’ fixed payments. The 10-year Treasury has lost almost 12% this year amid a decline in many financial assets, according to the S&P U.S. Treasury Bond Current 10-Year Total Return Index.

In July, El-Erian predicted that inflation, at the time running at a 5.4% annualized pace, wouldn’t be as transitory as the Federal Reserve was projecting. On Thursday, he said the Fed made a “policy mistake” on inflation, referring to the central bank not tightening monetary policy by reducing its balance sheet and raising rates until this year.

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While some economists see the Fed’s rate-hike regime as likely to push the US economy into a recession, El-Erian, a Bloomberg Opinion columnist, says that is his “risk scenario. Stagflation is my base line.”

“Be careful what you wish for. If you believe the labor market stays strong, wages remain buoyant and start catching up to inflation, then it’s hard to see inflation coming down,” he said. “But if you think we’re going to have a recession, sure, inflation is going to come down, but that’s not the sort of transitory inflation that anybody wants.”

The chair of Gramercy Fund Management and chief economic adviser at Allianz SE says the Fed must “make a choice and stick to it. The worst thing is the flip-flopping Fed, the Fed that hikes rates, and then pauses in September, and then starts hiking again and then pauses again. That would just mean that stagflation would persist much longer than it needs to.”

Read more: US Inflation May Lie Ahead, Core Elevated in 2023

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