US: CPI inflation expected to accelerate further to 2.7% y/y in February - TDS

In view of the analysts at TDS, US headline CPI inflation is expected to accelerate further to 2.7% y/y in February from 2.3% in January, with prices flat on the month.

Key Quotes

“Gasoline prices are expected to give a negative contribution this month, which should be offset by further gains in food prices and a healthy 0.2% print in the core index. The core CPI as a result is likely to slip back to 2.2% y/y after registering a 5-month high of 2.3% y/y in January. Core goods prices are key in the report following their 0.4% pickup in January—the strongest increase since 2011.”

“The outsized gain was driven by sharp jumps in apparel and new vehicle prices, though most categories recorded modest to moderate increases. While we expect some pullback in this category, led by the apparel component, we see less scope for an outright negative correction—especially in light of dissipating exchange rate pass through and rising prices at the producer level.”