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US INFLATION: CORRECT - Import Airfares Could Bias Core PCE Estimates Yet Higher

US INFLATION
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REPUBLISHED WITH CORRECT OCTOBER AIRFARES FIGURE (3.9%): The rise in import air passenger fares - the key input from the Import/Export price report into the Fed's preferred PCE gauge - came in at 3.9% M/M in October after 13.9% prior.

  • Note that this is a non-seasonally adjusted series, but this is a faster increase than in 2023, which combined with September's strong outturn suggests that there could be another upward bump to core PCE estimates (albeit a very small one). See chart.
  • Coming into today, post-CPI/PPI core PCE estimates were as follows (was 0.25% M/M in September) - note Fed Chair Powell said Thursday that core PCE was estimated to come in at 2.8% Y/Y in October, roughly consistent with a M/M reading in the high 0.2s/low 0.3s%:
    • BofA: 0.25%
    • Goldman Sachs: 0.26%
    • JPMorgan: 0.31%
    • TD: 0.31%
    • Note that after CPI but prior to PPI, expectations had been centered in the  0.21-0.25% area.
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REPUBLISHED WITH CORRECT OCTOBER AIRFARES FIGURE (3.9%): The rise in import air passenger fares - the key input from the Import/Export price report into the Fed's preferred PCE gauge - came in at 3.9% M/M in October after 13.9% prior.

  • Note that this is a non-seasonally adjusted series, but this is a faster increase than in 2023, which combined with September's strong outturn suggests that there could be another upward bump to core PCE estimates (albeit a very small one). See chart.
  • Coming into today, post-CPI/PPI core PCE estimates were as follows (was 0.25% M/M in September) - note Fed Chair Powell said Thursday that core PCE was estimated to come in at 2.8% Y/Y in October, roughly consistent with a M/M reading in the high 0.2s/low 0.3s%:
    • BofA: 0.25%
    • Goldman Sachs: 0.26%
    • JPMorgan: 0.31%
    • TD: 0.31%
    • Note that after CPI but prior to PPI, expectations had been centered in the  0.21-0.25% area.