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US INFLATION: Core CPI Seen Steady On Offsetting Volatile Factors, Flat Rents

US INFLATION

From our October CPI preview out today (PDF) - sequential core CPI is seen coming in basically the same as prior (roughly 0.30%), with headline edging up (0.20% vs 0.18% September). The table below shows consensus expectations across key categories of core CPI. To sum up expectations: the largest core categories are seen basically unchanged, but the volatile categories are seen reversing prior moves and essentially offsetting each other.

  • Used cars (large +ve): Used vehicles are seen as one of the primary upside drivers of sequential inflation in October, with analysts citing industry / wholesale surveys and idiosyncratic factors (hurricane-related replacement vehicle demand) for upside in October. The October expectation is for 2+% gains in this category vs 0.3% in September, in turn driving the broader core goods category higher.
  • Vehicle insurance (small -ve): After a strong 1.2% print in September, auto insurance inflation is seen moderating slightly in October (to 0.8%), though the bigger picture is that this category continues to show signs of post-pandemic inflation “catch-up”.
  • Rents (steady): There is no disinflationary progress seen in rents, with MNI’s collation of estimates showing that OER and primary rents are both seen coming in exactly the same as September (0.33% / 0.28% respectively). Analysts (and the Fed) generally expect rents to continue coming down over time.
  • Airfares (-ve): As with used vehicles, analysts see industry data as pointing to continued strength in airfares, albeit at a significantly slower pace than September’s 3.0% (estimates are towards but below 1.0% for October).
  • Lodging away from home (+ve): After an unexpectedly weak September (-1.9%), lodging prices are seen rebounding, with a rise of roughly 1.0% in October – again, with analysts citing relevant industry data.
  • Non-core: Energy (+ve): The relative upside in headline M/M inflation compared with core this month largely stems from an expectation that energy prices will drag less in October .(-0.6% median / -0.9% mean) than in prior months (-1.9% Sept). Despite gasoline prices softening, natural gas prices are seen to have risen sharply.
  • Food (-ve): Food price inflation came in at a strong +0.4% in September, but this is seen easing back slightly in October to 0.2%.
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From our October CPI preview out today (PDF) - sequential core CPI is seen coming in basically the same as prior (roughly 0.30%), with headline edging up (0.20% vs 0.18% September). The table below shows consensus expectations across key categories of core CPI. To sum up expectations: the largest core categories are seen basically unchanged, but the volatile categories are seen reversing prior moves and essentially offsetting each other.

  • Used cars (large +ve): Used vehicles are seen as one of the primary upside drivers of sequential inflation in October, with analysts citing industry / wholesale surveys and idiosyncratic factors (hurricane-related replacement vehicle demand) for upside in October. The October expectation is for 2+% gains in this category vs 0.3% in September, in turn driving the broader core goods category higher.
  • Vehicle insurance (small -ve): After a strong 1.2% print in September, auto insurance inflation is seen moderating slightly in October (to 0.8%), though the bigger picture is that this category continues to show signs of post-pandemic inflation “catch-up”.
  • Rents (steady): There is no disinflationary progress seen in rents, with MNI’s collation of estimates showing that OER and primary rents are both seen coming in exactly the same as September (0.33% / 0.28% respectively). Analysts (and the Fed) generally expect rents to continue coming down over time.
  • Airfares (-ve): As with used vehicles, analysts see industry data as pointing to continued strength in airfares, albeit at a significantly slower pace than September’s 3.0% (estimates are towards but below 1.0% for October).
  • Lodging away from home (+ve): After an unexpectedly weak September (-1.9%), lodging prices are seen rebounding, with a rise of roughly 1.0% in October – again, with analysts citing relevant industry data.
  • Non-core: Energy (+ve): The relative upside in headline M/M inflation compared with core this month largely stems from an expectation that energy prices will drag less in October .(-0.6% median / -0.9% mean) than in prior months (-1.9% Sept). Despite gasoline prices softening, natural gas prices are seen to have risen sharply.
  • Food (-ve): Food price inflation came in at a strong +0.4% in September, but this is seen easing back slightly in October to 0.2%.