US headline CPI expected to increase by 0.1% in Aug - Nomura
Research Team at Nomura, forecasts that the US headline CPI increased by 0.1% (+0.149%) m-o-m (+1.00% y-o-y) in August.
Key Quotes
“Excluding food and energy prices, we think that core CPI inflation accelerated moderately, to +0.2% (+0.191%) m-o-m (+2.24% y-o-y) in August from 0.088% in July.
Core CPI forecast
Among core components, there are a few items to watch as potential sources of volatility.
On core service categories, airline fares, a volatile component of core service prices, appear to have declined by around 5% m-o-m on a nonseasonally adjusted basis in August. Airline fares tend to decline in August, as the traveling season comes to a close. Thus, on a seasonally adjusted basis, we expect the airline fares price index to be unchanged m-o-m following a 4.9% fall in July.
Medical care service prices likely grew again in August after a strong pickup in July. However, the pace of the increase likely slowed, as the series tends to revert to trend.
The recent developments in rental housing markets suggest that rent inflation remained modest in August after slowing in July. However, prices for lodging-away-from-home, another part of shelter prices, could jump strongly as the PPI’s price index for hotels and motels has continued to increase in recent months, indicating the possibility that the CPI’s corresponding price index could increase significantly.
We expect little change in core goods prices in August. If prices remain unchanged in August, it would be the first time since February 2016 that core goods prices have not declined. Although import prices of consumer goods continued to decline in August, used car and truck prices, which dropped sharply in July, will likely rebound. The Manheim used vehicle value index, a leading indicator of used car and truck prices of CPI, suggests we should see some reversal of the declines in the next few months.
All things considered, we think that there is some upside risk to our core CPI forecast.”