MNI DATA PREVIEW: US Oct Headline CPI Seen +0.3%; Core Up 0.2%

By Brooke Migdon

     WASHINGTON (MNI) - U.S. headline CPI is expected to rise by median 0.3% in

October after September's flat reading, primarily on the back of rising energy

prices, according to a Bloomberg survey of analysts. Similarly, core CPI is

expected to recover slightly from September's sluggish 0.1% increase, with

Bloomberg pointing to a 0.2% gain.

     Gasoline prices, which account for 4.0% of the total CPI basket, rose

modestly in October after two months of decline, likely offsetting some weakness

in overall energy prices and energy services and propping up October headline

inflation.

     Despite a period of relative civility between the U.S. and China, President

Donald Trump's Sept. 1 tariffs on imports from China -- set into motion ahead of

the October 11 meeting that appears to have yielded at least the outline of a

"phase one" trade agreement -- remain active and are likely to be reflected in

October core CPI. 

     Apparel, one of the categories targeted by the tariffs, should see a boost

in prices in October after falling 0.4% in September. Footwear and household

furnishings should also see price increases as a result of the tariffs.

     Following a Nov. 7 announcement from China's Commerce Ministry that the

U.S. and China had agreed to roll back tariffs if ab initial trade agreement was

signed, President Trump told White House reporters that he hasn't "agreed to

anything." So the fate of Trump's impending Dec. 15 tariffs, which target

consumer goods like cellphones and toys, has yet to be decided

     Wage growth in October should also help hold up core inflation. After

leveling off in September, hourly wages grew markedly in October to $28.18 from

$28.12, with year-on-year wages also increasing, posting a 2.9% gain after

growing 2.8% in the previous month, signalling potential growth in core CPI

components.

     The forecast m/m increase in headline and core CPI is expected to leave

annual core inflation tracking at 2.4%. Headline inflation, however, would

remain at 1.7%, still short of the Fed's 2.0% PCE inflation target.

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

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