GS: Monthly Core CPI Could Be Revised By ~0.01pp On Average In 2H23

Goldman Sachs write on Friday's annual revisions to CPI.

• “The annual revisions tend to cause monthly inflation readings to be revised toward the annual average. In other words, higher inflation readings for the year tend to be revised lower and lower readings tend to be revised higher.”
• “On average over the last decade, about 20% of the relative strength of a month’s initial core inflation vintage has been revised away in its first annual revision.”
• “With inflation pressures easing over 2023, monthly core CPI was 0.06pp below the annual average in the second half of 2023. As a result, if the revisions are in line with the historically average 20%, monthly core CPI inflation would be revised roughly 0.01pp higher on average in 2023H2.”
• “We expect revisions to core PCE inflation in the same direction for 2023Q4 (prior quarters are not revised until the BEA’s annual revisions later this year) but smaller in magnitude, because only some of the PCE components use the CPI seasonal factors.”