US Core CPI Forecast: Forecasts from 7 Big Banks, Decline Continues

The Fed’s preferred inflation gauge, Core Personal Consumption Expenditure (Core PCE), will be released on Friday, January 27 at 13:30 GMT, and as we get closer to its release time, here are the forecasts from economists and researchers at seven major banks.

Markets expect core PCE inflation, which excludes volatile Food and Energy prices, to rise 0.3% m/m and expect the annual rate to decline to 4.4% from 4.7% in November. If so, it would be the lowest since October 2021, but still more than double the 2% target set by the Fed.

ENG

“We expect the Fed’s favorite inflation measure to show a relatively benign reading of 0.2%m/m, which would confirm the easing trend in price pressures.”

TDS

“Core PCE prices likely accelerated to a 0.3%m/m pace in December, although a 0.4% rise cannot be ruled out. YoY likely slowed to 4.5%, suggesting that prices continue to moderate, but They’re still stuck at high levels.”

NBF

“Still in December, the core CPI annual deflator could have come down from 4.7% to a 14-month low of 4.4%.”

Deutsche Bank

“We don’t expect the same declines seen recently in the CPI as some of the stronger PPI components from last week are better correlated with the PCE components. We expect a +0.4% monthly rise.”

Citibank

“Even through the last quarter of softer core CPI prints, we still expect core PCE to rise at a 4.0% annualized pace, still double the Fed’s 2% target.”

CIBC

“Core CPI inflation, the Fed’s preferred price measure, is likely to ease to 4.4% yoy.”

Wells Fargo

“Our forecast for the PCE deflator is for it to remain unchanged.”