US CPI Preview: Inflation calms down adding another signal of progress

On Tuesday, the US Bureau of Labor Statistics will release the most important inflation measure, the US Consumer Price Index (CPI) figures for November.

Economists and researchers from some major banks forecast that the core CPI will stay constant at 4.0% YoY while the headline CPI will decrease slightly to 3.1% YoY. Monthly headline inflation is predicted to increase by 0.1% from the previous release’s 0%, and the core CPI is predicted to increase by a tidbit to 0.3%.

ANZ economists predict Core CPI inflation to rise by 0.2% MoM in November, while headline CPI is expected to fall by 0.1% due to lower energy prices. The Fed’s restrictive monetary settings are expected to curb demand and prevent a possible rate cut.

Commerzbank predicts a 0.1% increase in US seasonally adjusted consumer prices in November, with the YoY rate falling from 3.2% to 3.1%. This small increase is mainly due to lower energy prices, particularly volatile gasoline prices, which fell by 6%. The Core CPI, excluding energy and food, is expected to remain strong at 0.3% MoM and unchanged at 4.0% YoY. The consumer price report is unlikely to change the picture of declining inflation, but the persistence of core inflation suggests it is only gradual.

Deutsche Bank sees the headline number at +0.1% (unchanged in October) and Core CPI accelerating to +0.3% (+0.2%). NBF expects the energy component to have had a negative impact on the headline index given the decline in gasoline prices during the month. This should help keep headline prices unchanged on a monthly basis.

TDS looks for Core CPI inflation to rebound to 0.3% MoM from 0.2% in Oct, with the headline also strengthening to 0.1%. The report is likely to show that the core goods segment added to inflation, while the shelter components (OER/rents) are expected to remain mixed.

SocGen calculates that gasoline prices fell by slightly more than 6% in November from October, maintaining a flat headline. Wells Fargo expects lower gasoline prices to hold the headline rate of inflation flat in November and forecast the Core CPI, which excludes food and energy, to rise 0.3%, signaling slower progress on underlying inflation.

Citi expects a 0.30% MoM increase in US Core CPI in November, stronger than the 0.23% increase in October and with risks tilted slightly to the upside for an even stronger print.