US Core CPI Forecast: Top 8 Banks Forecast, Inflation On Target

The Fed's preferred inflation indicator, Core Personal Consumption Expenditure (PCE), will be published by the US Bureau of Economic Analysis (BEA) on Friday, January 26 at 13:30 GMT and, as As we approach publication time, here are the forecasts from economists and researchers at eight major banks.

The general CPI is expected to remain stable at 2.6% year-on-year, while the underlying would fall two tenths to 3.0%. In monthly terms, both are expected to be at 0.2%.

TDS

We expect that the December data will continue to support the idea of ​​a slowdown in inflation, with an increase in the core CPI close to the trend of 0.2% month-on-month, and less than the 0.3% increase in the core CPI. In particular, December data is likely to show that core CPI price momentum at 3m/6m has fallen below the 2% target, adding to evidence that the worst for inflation is likely over. past.

Deutsche Bank

We see core CPI growth remaining at +0.1%.

NBF

The annual core CPI deflator could have advanced 0.2% month-on-month in December, a result that should translate into a decrease of 2 points in the 12-month rate to 3.0%. Although still high, this rate would still be the lowest observed in 33 months.

SocGen

We project a 0.3% increase for the core CPI deflator, but this is a rounding to 0.3%. The core CPI registered an increase of 0.309%. In general, the core CPI moves faster than the core PCE. This is mainly due to a greater weighting of rents and housing, which tend to grow much faster than the general CPI. The most important thing now is the slowing of the pace of CPI moderation, while the CPI continues to fall rapidly. Rigid rents are the problem. The core CPI has many more healthcare components, and specifically government-funded healthcare, while the CPI only captures households' out-of-pocket healthcare costs. After a spike during COVID, public and general healthcare costs are moderating.

CIBC

Based on the December CPI report and the wider CPI-CPI gap, we expect the core CPI deflator to be 0.2% MoM and 3.0% YoY in December.

Wells Fargo

We expect both the general and underlying PCE deflators to rise by 0.2% during the month, which, if met, would mean a slight acceleration compared to November.

Goldman Sachs

The forecast for core CPI inflation in December is 0.18%, which translates into an annualized semiannual rate of 1.88% and an interannual rate of 2.94%. This reflects the Fed's main measure of inflation. Overall PCE prices are also forecast to rise 0.18% in December, corresponding to an annual rate of 2.63%.

Citi

We expect another 2.0% annualized quarter-on-quarter increase in core PCE inflation and 0.19% month-on-month, a stronger increase than in recent months, but still notably softer than the recent pace of core CPI inflation.