US Inflation preview: Year-ago base effects to drag headline and core rates down – Scotiabank
08.08.2022, 04:53

US Inflation preview: Year-ago base effects to drag headline and core rates down – Scotiabank

Analysts at Scotiabank offer a sneak peek at what they expect from Wednesday’s US inflation release.

Key quotes

“The Cleveland Fed’s inflation ‘nowcast’ points toward inflation running a tenth or two beneath 9% y/y and it has been slightly underestimating actual CPI inflation for several months.”

“Further, while some PMIs have been indicating lessening price pressures, small businesses are not.”

“Other drivers are somewhat mixed.”

“Year-ago base effects will shift toward dragging the year-over-year headline and core rates down by about a half percentage point or slightly less in both cases.”

“July is typically a modest month for seasonality.”

“House prices will probably keep owners’ equivalent rent on the hot side.”

“All-grades retail gasoline prices fell by over 7% m/m NSA and about half that in seasonally adjusted terms. Henry hub natural gas prices fell by about 5% m/m NSA but the tiny weight on piped gas of under 1% should mean minimal drag.”

“Used vehicle prices seem to have fallen and are estimated to knock about 0.1% m/m off overall inflation while new vehicle prices seemed to be fairly flat.”

“Food-at-home and food-away-from-home are assumed to combine for another gain of around 1% m/m but pressures may be abating.”

“There is also likely to be an ongoing reopening effect upon prices as pent-up services demand continues to get unleashed.”

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