US CPI Prep (14th July)
Forecasts and Ranges
US CPI YoY: Forecast 3.8% | Prior 4.2% | Range 4.2% / 3.6%
US Core CPI YoY: Forecast 2.8% | Prior 2.9% | Range 3%/ 2.8%
US Core CPI MoM: Forecast 0.2% | Prior 0.2% | Range 0.4%/ 0%
US CPI MoM: Forecast -0.1% | Prior 0.5% | Range 0.3% / -0.3%
Investment Bank Views
Deutsche Bank
As we noted last week, we expect a roughly 9% decline in gas prices to weigh on June’s headline CPI (- 0.16% forecast vs. +0.47% previous) relative to core (+0.23% vs. +0.21%). Should our forecasts hit the mark, the year-over-year rate in the former would drop from 4.25% to 3.81%, while the latter would fall by 2bps to 2.83%. At the component level, we expect core goods prices to be roughly unchanged (+0.03% vs. -0.11%), while core services (+0.29% vs. +0.29%) should see a similar overall print to last month, though the details are likely to differ somewhat.
Bank of America
Headline CPI likely fell by 0.09% m/m in June as prices at the pump dropped sharply. Core inflation, however, should remain elevated at 0.28% m/m. 2.9% y/y owing in part to World Cup-related demand driving up services inflation. Based on this forecast, we expect core PCE to be slightly firmer than CPI again at 0.29% m/m (3 4% y/y). That should strengthen the case for hikes in the near-term. In our view.
Citi
Our economist’s final forecast is for a modest 0.19% MoM increase in core CPI in June, with slightly more downside risks than upside risks this month.
ANZ
We forecast the June CPI inflation report to show that headline inflation fell (-0.1% m/m), driven by the decline in oil prices. Core inflation momentum is expected to remain subdued (0.2% m/m).
CIBC
It’s the core rate where we need to see a bland reading. Softening gasoline prices, albeit to a much lesser degree than the move in crude oil, give us a shot at an
outright CPI decline, but what the Fed and we will be watching is the core measure. Getting a boring 0.2% there, and nothing higher than that, would help rule out a July rate hike and push the Fed’s real hike or no hike decision to September.
Summary of the Last Report
CPI rose 0.5% m/m in the previous report (after -0.1% m/m previously), with inflation at 4.2% y/y, while core increased 0.2% m/m and 2.9% y/y. The move was driven mainly by energy and shelter, with gasoline prices rebounding and shelter remaining one of the largest contributors to overall inflation.
Food prices also increased on the month, while core inflation saw continued strength across several service categories. Services inflation, particularly shelter, remained sticky, while goods inflation was more mixed, reinforcing the view that underlying price pressures are easing only gradually.
