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Modi, AMLO Top Major Economy Leader Poll, Macron Last


Under Pressure


Trend Condition Remains Bearish

Repeats Story Initially Transmitted at 18:45 GMT Jan 11/13:45 EST Jan 11
By Sara Haire and Holly Stokes
     WASHINGTON (MNI) - The US consumer price index will be released Friday,
with the median forecast among analysts in an MNI survey expecting a modest 0.1%
gain for headline and a 0.2% rise for core. Despite most analysts expecting a
softer gain, there is a whisper of a 0.3% gain for overall CPI circulating in
markets. With expectations for energy prices to dip slightly and food prices to
remain flat, a large headline CPI would derive from core strength.
     Below are five points we feel warrant particular attention prior to the
data release:
     - MNI calculations and past surveys show no clear risk to analysts' median
estimate, indicating the high level of accuracy that analysts have with this
series. In the past 10 years, December headline CPI forecasts were on target 5
times with misses split 3 to 2 for underestimates to overestimates. Core CPI was
on target 7 of the past 10 years, while 3 years had very small overestimates
(+/-0.1 pp). Since MNI's survey series started 25 years ago, December core CPI
has never been underestimated and December overall CPI has been underestimated
only 3 times, making the chance of a higher than expected outcome very low.
     - In the past twelve months, the whisper number has missed 75% of the time
with an absolute average miss of 0.19pp from the actual value. In contrast, the
MNI survey median has missed only 50% of the time, with an absolute average miss
of 0.08pp over the same period. Both the whisper and the survey tend to
overestimate when they do miss. When overestimated, the whisper number averages
a 0.30pp variance from the actual result while the MNI survey median averaged a
0.15pp overestimate.  
     - A few analysts supported market expectations for an upside miss - arguing
that apparel, physicians' services, and lodging away from home are due for
rebounds, given November's disappointing prints and that all three of these
categories exhibit mean-reverting tendencies.
     - Market expectations for a strong print are visible in the rallying
dollar. If majority analysts are correct and CPI disappoints, this could result
in a volatile dollar. Thursday morning when PPI and PPI ex food and energy came
in below expectations with 0.1% declines, well below expectations for 0.2%
gains, Treasuries saw a rebound. If CPI comes in soft, as analysts are
expecting, Treasuries have the potential to see another rebound. 
     - Analysts expect soft inflation to keep the Fed cautious in the first
quarter, staying on a gradual rate hiking cycle. A strong print could help
further ensure support for a March hike. 
     --Compiled with assistance from Kevin Kastner
--MNI Washington Bureau; +1 202-371-2121; email:
--MNI Washington Bureau; +1 212-800-8517; email: