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Morgan Stanley: At High End Of Core CPI Expectations

US OUTLOOK/OPINION

Morgan Stanley has the joint-highest October core CPI forecast on the sell-side, expecting a +0.5% M/M outturn (Y/Y 4.5%).

  • They see price strength in several Covid-sensitive categories, with apparel and both new/used vehicles as the biggest contributors.
  • While they see hotel prices increasing after 2 months of decline, conversely, they see airfares sliding for the 4th consecutive month.
  • On shelter: "OER and rent inflation remains solid throughout our forecast horizon."
  • Meanwhile on headline, they expect food price inflation to decelerate sharply, with energy accelerating sharply, bringing headline overall to +0.7% M/M vs +0.41% prior.

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