US: Expect a 0.11% m-o-m increase in CPI inflation headline - Nomura

Analysts at Nomura expect a 0.11% m-o-m rise in US headline CPI inflation after the core CPI was surprised to the downside in September, rising only by 0.1% (0.127%) m-o-m.

Key Quotes

"Many had expected some boost from the hurricanes but the actual impact on September CPI core muted. For instance, we expect damaged homes and scrapped vehicles to have pushed up rent and vehicle prices, but inflation of both items slowed. That said, we can not rule out the possibility of inflationary pressure arising from the hurricanes as realized by a longer lag than we initially thought. Thus, we expect a slight acceleration in rent inflation in October after a slowdown in the previous month. "

"Moreover, some of the prices that dropped sharply in September, such as prescription drug prices, will likely reverse those declines in October. Although vehicle prices, which have strong inertia, may have risen in the face of inflation from imported consumer goods prices and domestic retail prices, Overall, we expect core goods and service prices to increase by 0.14% and 0.23% m-o-m, respectively. Altogether, we expect a rise of 0.21% m-o-m in the aggregate core CPI price index. This forecast translates to a 1.8% (1.76%) rise on a year-on-year basis, up from a 1.7% (1.69%) increase in the previous month. "

"On noncore components, we expect energy prices to have fallen, driven by a pullback in retail gasoline prices after a weather-driven surge in September. Further, food prices likely increased at a steady pace, as we expect food-at-home prices to have rebounded. Food-away-from-home prices seemingly increased at a trend-like pace. Altogether, we expect a 0.11% m-o-m increase in headline CPI inflation, which would translate into a 2.0% y-o-y rate. Our forecast for CPI NSA is 246,680. "

Share: