US CPI Preview: Forecasts from 10 major banks, higher but showing moderation

The US Bureau of Labor Statistics will release the January Consumer Price Index (CPI) data on Thursday, February 10 at 13:30 GMT and as we get closer to the release time, here are the forecasts by the economists and researchers of 10 major banks regarding the upcoming US inflation data. 

The CPI (YoY) is forecast to rise to 7.3% from 7% in December. Meanwhile, Core CPI is expected to rise to 5.9% from 5.5%.  

SocGen

“The current pace may not seem out of step, but the latest monthly increases are running at 0.4% MoM, which if sustained, would lift the YoY measure to 4.8%. Rents comprise about 30% of the CPI, so even modest moves factor heavily into overall inflation. Pre-COVID, rents running above 3% along with other service sector products running above 3% were offset by very weak pricing of hard goods such as autos and electronics. Moving back to that inflation environment does require more time.” 

NBF

“While the cost of food should have continued to rise at a rapid pace, we still expect the headline CPI index to increase at a slightly slower pace than in the prior month (+0.4% instead of +0.5%), weighed down by stagnating pump prices. If we’re right, the headline annual rate would climb three ticks to 7.3%, the highest since February 1982. Core prices, meanwhile, could have gained 0.5% MoM, supported by another healthy gain for shelter. On a 12-month basis, core inflation could jump to a 39-year high of 5.9%.”

RBC Economics 

“United States Headline CPI growth is expected mover higher to 7.3% YoY in January (0.4% MoM) with ex-food & energy price growth accelerating to 5.9% (0.4% MoM).”

Deutsche Bank

“We are projecting that monthly headline CPI growth will slow to +0.36% in January, with core inflation also slowing to +0.36%. However, this would still push YoY readings to 7.2% and 5.8% (consensus at 7.3% and 5.9%) respectively the highest since 1982 for both. There are plenty of wildcards in the release but we'll be watching rents/OER most as this makes up around 40% of core and around a third of the headline number. Since last summer it's been clear from our models that this was going to continue going up and up and given its weight it's very difficult for inflation to mean revert without it also doing so. It's showing no sign of this at the moment and likely won't for several months at least.”

ING

“US CPI is likely to see the headline rate hit 7.3% YoY (0.4% MoM), the highest rate since February 1982. The core rate, which excludes the volatile food and energy components, is expected to hit 5.9% (0.4%). It was last up here in October 1982. Inflation pressures are broad-based given robust demand in an environment of significant capacity constraints in both the goods and the services sectors of the economy.”

CIBC

“Total inflation is set to accelerate to 7.2%, while core inflation will reach 5.9%. We are a touch weaker than the consensus, which could be negative for bond yields and the greenback.” 

TDS

“The core, as well as the total index likely, slowed on an MoM basis, with the pace still fairly strong. Strength in used vehicles was probably partly offset by weakness in hotels and airfares. Our 0.4%/0.4% MoM total/core estimate is 0.36%/0.37% before rounding, so we see more risk of 0.3%/0.3% than 0.5%/0.5%. The consensus is looking for 0.4%/0.5%. Base effects will likely help boost the YoY readings in the CPI data. Our estimates imply 7.2%/5.8% YoY for total/core prices, up from 7.0%/5.5% in December. That is slightly below the 7.3%/5.9% consensus.”

Citibank

“January CPI MoM – Citi: 0.5%, median: 0.5%, prior: 0.5%; CPI YoY – Citi: 7.3%, median: 7.3%, prior: 7.0%; CPI ex Food, Energy MoM – Citi: 0.5%, median: 0.5%, prior: 0.6%; CPI ex Food, Energy MoM – Citi: 6.0%, median: 5.9%, prior: 5.5%. We expect a 0.51% MoM increase in core CPI in January, although with risks again likely on the upside. One source of uncertainty in January CPI though will be a reweighting of the CPI basket based on consumption data from 2019-2020.”

ANZ 

“We expect US core CPI to have risen by 0.3% MoM in January, a more modest outturn than recent months.”

Nordea

“We see headline inflation print at 7.4% while core inflation prints at 5.9%, which could translate into a small selloff in bonds, wobbly equities and a supported dollar.”