Deutsche: Big Headline CPI Acceleration, With Core Strong

Deutsche analysts are expecting a stronger-than-consensus increase in headline June CPI (+1.33% M/M / +0.95% prior / + 1.1% consensus), with the run-up in gasoline prices in the first half of the month being the major culprit. That would push Y/Y headline to 9.0% Y/Y (+8.6% prior, +8.8% consensus).

• Core will be strong but unlike headline didn't accelerate much in June: Deutsche pencils in +0.64% M/M (+0.63% prior / +0.5% consensus) with core ticking down to 5.8% Y/Y (+6.0% prior / +5.7% consensus).
• They see elevated primary rent and OER prints, at +0.6% each ("Given that rents are one of the categories for which the Phillips curve works, the strength in the labor market should keep rent prints around this level in the near term"), with strong gains in new cars (+0.8%) - however, there are some downside risks to used car price gains.
• Travel-related categories (lodging, public transport) will continue rising. And Deutsche analysts will be watching other durable goods price changes in light of inventory building/demand destruction.