US CPI Preview: Goldman Sachs, WSJ’s Timiraos tease upside surprise from January inflation
14.02.2023, 01:33

US CPI Preview: Goldman Sachs, WSJ’s Timiraos tease upside surprise from January inflation

As markets brace for the US Consumer Price Index (CPI) for January, multiple analysts rolled out their say on the key inflation data. Among them, Goldman Sachs and the ace editor of the Wall Street Journal (WSJ) Nick Timiraos gained major attention as both suggest a surprise uptick in the US CPI for January, mainly due to the year-start consolidation of the move.

WSJ’s Timiraos cited the Federal Reserve’s (Fed) research paper titled, “Residual Seasonality in Core Consumer Price Inflation: An Update,” to justify his expectations stating, “Core inflation has generally come in higher in the first of the year than the second half of the year.”

GS, on the same line, mentioned that their economists have argued that inflation readings might be stronger at the start of the year because a disproportionate number of prices are reset at the start of the year, and firms might set contract rates higher than usual in the current environment. 

It should be noted that the firms’ actions of inflation contract prices were termed as a more prolonged overshoot of the Fed's inflation aim.

GS also cites the latest market responses to data surprises as somewhat more symmetric.

If the January inflation data fail to "rise to the occasion," then the macro backdrop could continue to push towards Dollar depreciation,” said GS.

Also read: US Consumer Price Index Preview: US Dollar vulnerable to violent crash, every 0.1% in Core CPI matters

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