MNI DATA PREVIEW: US April Core CPI Expected To Rise 0.2%

By Kevin Kastner

     WASHINGTON (MNI) - The Consumer Price Index to be released on Friday is

expected to rise by 0.4% based on both the Bloomberg consensus and the median

forecast in an MNI survey of analysts. Core CPI is expected to rise 0.2% due to

a possible rebound in apparel prices. Market participants are also looking for a

0.4% increase for overall CPI.

     --OVERESTIMATES COMMON

     Analysts have a tendency to overestimate overall CPI, with nine misses to

the high side over the last 20 years and only four estimates to the low side.

That would suggest that the calls for a 0.4% gain are overzealous, but the

accuracy level of forecasters (six correct estimates in the last 10 years)

suggests the expected gain could materialize.

     --NO BIAS FOR CORE READINGS

     The accuracy of forecasters is also on display for core CPI, with seven

overestimates, seven underestimates and six correct estimates in the last 20

years, almost all by 0.1 percentage point. More recent forecasts show a similar

split, with a correct estimate almost as likely as either an underestimate or an

overestimate. 

     --APPAREL PRICE REBOUND?

     Prices of apparel prices plunged by 1.9% in March, the largest decline in

70 years, but technical factors in calculating the series were a key factor.

Even Fed Chair Powell called out the series as one of the "transitory" factors

that is holding back an advance in core inflation. A rebound in apparel prices

is likely in April and presents an upside factor. 

     --GAS PRICES UP AGAIN

     Even after rising by 1.5% in February and 1.5% in March, analysts note the

likelihood of another gasoline price increase in April, based on a solid

month/month gain reported by AAA. Even so, the recent gains are only beginning

to make up for declines at the end of 2018.

     --Y/Y RATES STEADY

     Despite a large gain expected for overall CPI in April, the year/year rate

is unlikely to move from the 1.9% rate seen in March due to a solid gain in

April 2018. Likewise, core CPI is expected to hold right around the 2% rate

posted in March. 

--MNI Washington Bureau; tel: +1 202-371-2121; email: kevin.kastner@marketnews.com

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