US PPI rise poses risks for higher November CPI - ING

Rob Carnell, Chief International Economist at ING, suggests that the retail margins increase in the US could be mirrored in November CPI delivering spike in prices.

Key Quotes

“US final demand producer prices rose 0.4% MoM in November. This is the highest month on month rise since June. Though what really grabs the attention is the 1.3% MoM rise in trade services. This is mainly due to wider margins in the wholesale and retail sector. And as such, could well be echoed in the November CPI release on Dec 15th.”

“With the consensus expectation for only a 0.2% MoM increase in November's headline CPI, we now think that the risk of a higher (say 0.4%MoM) figure is looking more likely. If so, then headline inflation will rise from 1.6% in October, to 1.9% in November - in excess of the 1.7% YoY consensus estimate.”