America’s CPI Preview: Forecasts by 10 major banks

The annual CPI is expected to decline to 6.5% from 7.1% in November and see the Core CPI, which excludes volatile food and energy prices, edging lower to 5.7% from 6%. On a monthly basis, the CPI is forecast to stay unchanged while the Core CPI is expected to rise 0.3%.

The US Bureau of Labour Statistics will release the Consumer Price Index report for December on Thursday, January 12 at 13:30 GMT and as markets get closer to the release time, forecasts by the economists and researchers of 10 major banks have been collected on the upcoming US inflation data as follows:

Wells Fargo

“We estimate CPI fell 0.2% in December, bringing the YoY rate down to a 14-month low of 6.3%. We expect another sizable decline in energy prices to weigh on the headline and offset further gains in food and core services prices. But the drop in prices should also be helped along by another decline in core goods, led once again by used autos. We expect core inflation to rise 0.2% with the pace of core services prices little changed. While we believe that shelter inflation is close to its peak, continuing strong gains in the price of other core services can really pump the breaks on progress toward 2% inflation.”

SocGen

“We expect the headline CPI to hold flat against November (0.0%) while moderating to a 6.5% YoY increase, down from the 7.1% posted in November. The Core CPI should be up, and we expect a rise of 0.4% MoM.”

RBC Economics

“We expect YoY US consumer price growth to slow significantly in December to 6.3% from 7.1% in November. The steep decline in headline price growth is largely thanks to a significant drop in energy prices. We expect ‘core’ (excluding food & energy products) price growth to slow to 5.6% YoY in December from 6.0% in October. Further signs of declining price growth would support further slowing in the pace of hikes from the Fed. We continue to expect 50 bps of additional hikes to the Fed funds target range in Q1 before a pause at a terminal rate of 4.75% to 5.0%.”

Deutsche Bank

“In terms of the MoM rate, the headline CPI is expected at -0.15% at DB with Core CPI expected at +0.22% at DB. In terms of YoY, headline is expected to drop from 7.1% to 6.3% at DB with Core falling from 6% to 5.6%.”

ING

“We expect to see a further moderation in the annual rate of inflation from 7.1% down to 6.6%, but this is still more than three times faster than the Federal Reserve’s 2% target. Still, a 0.3% MoM print would lead to the annual rate of Core inflation hitting 5.7% versus 6% in November. We expect to see much sharper falls in the annual rate of inflation from the early second quarter onwards.”

CIBC

“There was more relief in the form of lower gasoline prices for households in December, which will be behind the expected 0.1% monthly decline in total prices. That retrenchment will have been limited by pressure in food prices and an expected 0.2% advance in the core group (excluding food and energy), with the latter likely showing strength in core services tied to the tight labor market, against an easing in core goods prices on weaker demand and the improvement in supply chains and inventories. We are a tick below consensus for both total and core inflation, which could nudge bond yields and the USD lower, but be a plus for equities.”

Commerzbank

“In the US, inflation is clearly on the retreat. From its peak of 9.1% in June, the YoY rate most recently fell to 7.1% in November. For December, we forecast a further decline to 6.4%. Used car prices are likely to have fallen by almost 3% in December from November. We therefore also expect the Core inflation rate to decrease from 6.0% to 5.6%. This would mean a continuation of the easing in inflation – a trend that should continue in 2023. However, we stand by our assessment that the fundamental inflation problem will not be solved. A sustained return to 2% inflation is likely to be prevented by demographically induced labor shortages, the costs of climate policy and increasing protectionism.”

TDS

“Core prices likely edged higher in Dec, with the index rising 0.3% MoM after printing 0.2% in Nov. Shelter inflation likely remained the key wildcard, though we look for goods deflation to act again as a major offset. Importantly, gas prices likely provided new relief to the CPI, as they fell sharply in Dec. All told, our m/m forecasts imply 6.5%/5.7% YoY for total/core prices.”

NBF

“The food component likely remained relatively strong, but this increase should have been more than compensated by lower gasoline prices. As a result, headline prices could have decreased 0.1% MoM. If we’re right, the yearon-year rate should come down from 7.1% to 6.7%. The Core index, meanwhile, may have continued to be supported by rising rent prices and advanced 0.3% on a monthly basis. This would translate into a two-tick decline of the 12-month rate to 5.8%.”

ANZ

“We expect US December Core CPI inflation to rise by 0.4% MoM, with headline flat thanks to lower energy prices. YoY, this would mean core eased to 5.8% from 6.0% and headline to 6.7% from 7.0%.”