US CPI estimates by major banks, strong headline amid surging energy prices

The US Consumer Price Index (CPI) data, the most significant indicator of inflation, is set to be released by the US Bureau of Labour Statistics on September 13. Economists and analysts of 10 major banks have provided estimates for the awaited US inflation print for August.

The headline CPI is predicted to increase by 3.6% YoY in August, while the core is predicted to decrease by 4.3% YoY. The headline and core CPI are forecast at 0.6% and 0.2%, respectively, on a monthly basis.

Citi expects a stronger increase in core inflation in August after two consecutive 0.16% MoM increases, with core CPI rising 0.3% MoM. However, at 0.252% MoM unrounded, core CPI would be close to printing another 0.2% increase, albeit still a stronger gain compared to June and July. Additionally, there is some further slowing in shelter prices with 0.44% primary rents and 0.46% owners’ equivalent rent. Meanwhile, headline CPI should rise a strong 0.6%, the strongest increase since June 2022.

RBC Economics expects headline CPI to tick up to 3.6% YoY in August, up from 3.2% in July. This increase is almost entirely explained by higher global energy prices. Aside from energy, US price pressures have eased substantially in recent months, with food price growth moderated sharply and ‘core’ (excluding food & energy) price growth to slow to 4.3% YoY in August from 4.7% the month before. That will drop the measure further below a 6.6% peak in September last year.

NBF expects the energy component to have had a sizeable positive impact on the headline index given the sharp rise in gasoline prices during the month. This, combined with another healthy gain in shelter costs, should result in a 0.6% increase in headline prices. If right, the YoY rate could move up from 3.2% to 3.7%, marking the biggest increase in nearly a year and a half for this indicator. The advance in core prices could have been more subdued (+0.3% MoM) thanks in part to a decline in the price of used vehicles.

TDS expects the report to provide additional evidence that the core segment has taken a step down in terms of sequential price gains: they are projecting another 0.2% MoM increase, which would mark the core’s third consecutive month running at that pace. On the contrary, headline CPI inflation likely accelerated to 0.6% MoM largely as a result of surging gasoline prices in August. Wells Fargo forecasts core CPI gained 0.18% in August, equating to a 4.3% YoY rate. If realized, the Fed would achieve its elusive 2% target on a three-month annualized basis.

Danske Bank expects another low core CPI print at 0.2% MoM (4.3% YoY). ANZ forecasts US core CPI to rise by 0.2% MoM in August. Higher energy prices should result in the headline CPI rising by a more substantive 0.5% MoM.

ING predicts fairly big jumps in August’s MoM headline readings with upside risk relative to consensus predictions. Higher gasoline prices will be the main upside driver, but also see the threat of a rebound in airfares, medical care costs, and higher insurance prices. The year-on-year rate of core inflation will slow to perhaps 4.4%.

Deutsche Bank predicts that headline CPI will see its largest monthly increase since June 2022, while core inflation is likely to remain relatively becalmed. The positive momentum should continue, with the three-month annualized rate falling by about 90 bps to 2.2%, and the six-month annualized rate falling by 50 bps to 3.6%.