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US INFLATION: No Changes To Core CPI Forecasts After PPI (2/2)

US INFLATION
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For CPI, the softer-than-expected-overall PPI report (which more often than not comes out after and not before CPI) appears to have been muted - we have seen no changes to CPI forecasts as a result (most analysts have said as much explicitly). Pre-PPI consensus for CPI per MNI medians were 0.38% M/M for headline, and 0.24% for core. 

  • Some analysts noted that sequential food prices were low in PPI (-0.2% M/M), which could on the margins have bring some softer implications for headline CPI (consensus is for CPI food prices to rise 0.4% for a 2nd month).
  • But if anything, we could see a slight upside bias to core PCE vs pre-PPI consensus on account of airfares coming in much higher than expected in PPI than analysts had expected (up 7%) which may be reflected to some degree in airfares (CPI consensus was for a little above 1% after 0.4%). See chart.
  • On another note, upward revisions to PPI in prior months could marginally upwardly bias prior month PCE revisions.
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For CPI, the softer-than-expected-overall PPI report (which more often than not comes out after and not before CPI) appears to have been muted - we have seen no changes to CPI forecasts as a result (most analysts have said as much explicitly). Pre-PPI consensus for CPI per MNI medians were 0.38% M/M for headline, and 0.24% for core. 

  • Some analysts noted that sequential food prices were low in PPI (-0.2% M/M), which could on the margins have bring some softer implications for headline CPI (consensus is for CPI food prices to rise 0.4% for a 2nd month).
  • But if anything, we could see a slight upside bias to core PCE vs pre-PPI consensus on account of airfares coming in much higher than expected in PPI than analysts had expected (up 7%) which may be reflected to some degree in airfares (CPI consensus was for a little above 1% after 0.4%). See chart.
  • On another note, upward revisions to PPI in prior months could marginally upwardly bias prior month PCE revisions.
image