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GS: Above Consensus For Core CPI Despite Sequential Rent Moderation

US OUTLOOK/OPINION
  • Goldman Sachs forecast core CPI at 0.49% M/M (cons 0.4) after December’s upward revised 0.4%, lowering the year-ago rate only a tenth to 5.63% Y/Y.
  • This reflects a 0.08pp boost from larger-than-normal start-of-year price increases for prescription drugs, medical services, car fees, and alcohol.
  • They also expect airfares to bounce on higher oil prices (worth +2bps) and another gain in the car insurance category. Used car prices should also give a smaller drag (-3bps in Jan following -9bps in Dec) reflecting the stabilization in auction prices, positive residual seasonality, and last week’s downward revision to the weight of this CPI category.
  • On the downside, they see a sequentially slower pace of shelter inflation as weakness in new rental pricing begins to offset continued upward pressure on renewing leases.
  • Headline seen +0.55% M/M, reflecting higher gasoline and food prices, for 6.39% Y/Y from 6.5%.

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