Major Banks: CPI Expected To indicate Some Consumers’ Relief

On Tuesday, key inflation data will be released. The August CPI reading will be closely watched traders and investors, particularly as it is released ahead of the next FOMC meeting on September 20-21.

According to analysts, the CPI will show a decline of 0.2% in August, on the back of a further plunge in gasoline prices.

Bank of America

“We look for headline CPI to decline by 0.1% MoM, its first decline since May 2020, and for core CPI to advance by 0.3% MoM. This would leave headline and core CPI up 8.2% and 6.0% YoY, respectively.”

ANZ

“We expect US core CPI to rise by 0.4% MoM in August and headline inflation to be flat for the second straight month with falling energy prices dragging headline down.”

Commerzbank

“Overall, we expect consumer prices to stagnate in August (consensus -0.1%). The annual inflation rate is thus likely to have fallen to 8.1%. Even though the peak in the inflation rate is probably behind us, it is nevertheless too early to sound the all-clear. This is because the recent decline in the inflation rate is mainly attributable to volatile components such as energy prices. By contrast, the sharp rise in rents, the most important component of the consumer price index, is likely to continue for the time being. As a result, the core rate of inflation should actually increase to 6.2% in August.”

ING

“CPI should show headline inflation being depressed by lower gasoline prices, but core inflation is likely to rise to 6.1% from 5.9%.”

TDS

“Our estimate for August is -0.2%/0.3% MoM for headline/core CPI; we see more risk of 0.2% than 0.4% for the core series (0.28% unrounded). On a YoY basis, we look for inflation to slow to 8.0% YoY for the headline, but to pick up slightly to 6.0% for the core.”

SocGen

“For August, we expect the headline CPI to fall 0.1% MoM due to a plunge in gasoline prices from a high. Early September gasoline prices are still falling, implying a weak headline figure for September too. Headline inflation rates peaked at 9.1% in June, fell to 8.5% in July and should register 8.1% in August. We expect the headline CPI to fall below 7% by year-end, but uncertainty over energy prices clouds that projection. Our core-CPI forecast is 0.4% MoM. That projection is based on a 0.6% shelter cost increase that is offset by weak pricing for apparel, motor vehicles and public transportation. These latter categories have been volatile. We expect weak auto pricing in the quarters ahead, but the still tight inventory readings, which have been limited by semiconductors, mean that the monthly forecasts are more uncertain.”

NBF

“Headline prices could have decreased 0.2% moM, their biggest drop since April 2020. If we’re right, the year-on-year rate should come down to 7.9% from 8.5%. Core prices, meanwhile, may have continued to be supported by rising rent prices and advanced 0.3%. This would translate into a two-tick increase of the 12-month rate to 6.1%.”

Westpac

“We forecast +0.2% for core and -0.2% for headline. If achieved though, it should not be assumed that October and beyond will see repeats, with volatility likely to persist.”

Deutsche Bank
“We expect a slight decline in the headline CPI number (-0.09% MoM) but an acceleration of +0.30% in core, which would continue the pattern from July’s reading (unchanged and +0.3%, respectively) which came in lower than expected. We believe the YoY headline CPI should fall five-tenths to 8.0%, while core should tick up a tenth to 6.0%.”

CIBC

“The relief from higher prices at the pump extended into August and should result in cooling in annual inflation to 8.0%. While global indices of food prices have pulled back lately, that may take longer to feed through to the CPI. Although there was a sharp drop in used car prices, continued pressure from housing costs likely resulted in a 0.3% monthly rise in core prices, leaving the annual rate a tick hotter at 6.0%, magnified by base effects. We expect the annual inflation readings to look a touch softer than the consensus, but that won’t matter for the Fed given the still-elevated readings.”

Wells Fargo

“We look for prices to have declined 0.2% last month, which would be the largest monthly drop since the spring of 2020. A further plunge in gasoline prices is expected to lead the headline lower, while additional giveback in travel services and used cars should help hold the core to a 0.4% month-over-month increase.”

Citibank

“US August CPI MoM – Citi: -0.1%, prior: 0.0%; CPI YoY – Citi: 8.0%, prior: 8.5%; CPI ex Food, Energy MoM – Citi: 0.4%, prior: 0.3%; CPI ex Food, Energy YoY – Citi: 6.1%, prior: 5.9%. In the last key CPI release ahead of the September FOMC meeting, it will be particularly important for this release to assess details underlying another ‘softer’ core inflation reading, as there are notable downside risks relative to expectations. However, the data may not be enough to convince the Fed of sustainably slowing inflation which would leave another 75 bps hike on the table for the Sep 21 FOMC meeting.”