Analysts at Nomura point out that the US headline CPI increased 0.3% (0.331%) m-o-m in October, in line with the market consensus but slightly below their forecast of 0.352%.
Key Quotes
“Among non-core components, food prices came in a little weaker than we expected, decreasing by 0.1% m-o-m.”
“Excluding food and energy prices, core inflation accelerated to 0.2% (0.193%) m-o-m after decelerating in August and September, in line with the market expectation of 0.2% but slightly lower than our forecast of 0.232%. As a result, the 12-month change of core CPI inched down to 2.1% (2.139%) in October from 2.2% (2.170%) in September (Nomura: 2.192%, Consensus: 2.2%).”
“Most of the swing in core CPI inflation can be explained by the rebound in used vehicle prices. However, stripping out used vehicle prices and apparel prices, another volatile component, core CPI inflation would have slowed slightly from the previous month, indicating that the underlying trend of core inflation remains more stable than the official data suggest.”
“GDP tracking update: The components of the October CPI that are relevant to PCE came in mostly in line with expectations. However, CPI food prices were weaker than our expectations. Slightly weaker-than-expected headline PCE price inflation suggests more growth in real PCE growth in Q4. Thus, we raised our Q4 GDP tracking estimate by 0.1pp to 2.5% q-o-q saar.”
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