/OUTLOOK: Citi CPI Preview

Wednesday focus on CPI MoM (0.5% est, 0.9% prior); ex food/energy (0.4% est, 0.9% prior), YoY (5.3% est, 5.4% prior); ex food/energy (4.3% est, 4.5% prior). Sell-side previews:

• Citi economists say details for inflation metrics like CPI are becoming much more important as they forecast a "solid 0.39% increase in core CPI in July, with some further upside from transitory components such as airfares, but with strength in components like used car prices likely coming to an end."
• Citi sees transitory factors as being "played out". "In July, we expect still some upside from components like airfares, but strong shelter prices, which also face sizable upside risks in our view, will be the much more important factor, signaling the persistence of stronger inflation into 2022."
• Headline CPI should rise a solid 0.51%MoM in July and retrace just slightly to 5.3% from 5.4%YoY. Of the components of headline CPI, we are most interested in prices for restaurant services, which have increased notably in recent months. This has been the clearest example of previously-rising wages for restaurant workers being passed through to higher consumer prices.