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     WASHINGTON (MNI) - The Consumer Price Index will be released Thursday, and
analysts are expecting both overall and core CPI to rise 0.2% in September.
     Ahead of the release, we outline five themes for particular attention.
     This month, analysts are forecasting a 0.2% increase in the headline CPI
value. Their history for estimating this value in September shows a tendency to
be very accurate. In the last 20 years, analysts have been on target nine times,
underestimates six times, and overestimated five times. When they underestimate,
they do so by an average of 0.13pp and when they overestimate it is by an
average of 0.12pp. This indicates that a miss in either direction for this
month's report should be relatively equal in size. In the last ten years,
analysts' expectations have been on target five times. They have overestimated
three times and underestimated twice during this time. Further supporting their
tendency to be accurate is the fact that in the last five years, analysts have
been on target four times and overestimated once by 0.1pp. If the headline value
does not come in as expected, there is no clear risk for the direction of a
miss, but it is likely that a miss will be very small.
     Based on analysts' history of overestimating core CPI, there is a downside
risk for this month. In the last 20 years, analysts have overestimated ten
times, underestimated four times, and been on target six times. On average, they
overestimate by 0.11pp and underestimate by 0.10pp, suggesting that a miss in
either direction this month would be about the same in size and relatively small
overall. However, in just the past ten years, analysts have shown a clear
tendency to overestimate, having done so eight times. If analysts' 0.2% forecast
for the seasonally adjusted figure is accurate, then the year/year rate for core
CPI could tick up to 2.3% after rounding.
     Both markets and analysts are anticipating a 0.2% rise in overall CPI in
September. Since September 2017, they have been in agreement only three times.
In the last year, markets have missed the mark seven times, with five
overestimates averaging 0.2pp and two underestimates averaging 0.2pp. Their
absolute average miss for the last year is lower, at 0.12pp, a reflection of
having been on target five times. Analysts have missed six times, with five
overestimates averaging 0.1pp and one underestimate averaging 0.2pp. Like
markets, analysts' absolute average miss is lower, at 0.06pp, since they have
been on target six times in the past year. Based on their history, it is likely
that if both markets and analysts miss this month, there will be a downside
     Earlier Wednesday, the Bureau of Labor Statistics released their monthly
Producer Price Index report, which includes a measure of prices received by
producers on items meant for personal consumption. While the headline figures
were in line with the CPI estimates, the PCE-based measures for overall and core
were a bit softer at +0.1% and +0.2%, respectively. This suggests a degree of
downside risk, but are still generally in line with analyst forecasts.
     After an additional $200 billion worth of tariffs on goods imported from
China were announced in September, analysts are expecting some increased upward
pressure on core CPI in September, with a further impact in October as the
tariffs did not get implemented until the last week of September. Although
tariffs have had little apparent impact on consumer prices so far this year, it
is possible that could change, as the extent of the newest round of tariffs is
much larger the previous one - $200 billion versus $50 billion worth of goods.
In total, this means that roughly one half of all Chinese exports to the US will
face tariffs. This could cause both the month/month and year/year rates of core
CPI growth to move a bit higher than expected.
--MNI Washington Bureau; tel: +1 202-371-2121; email:

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