Analysts at Nomura noted how the headline CPI inflation was up a modest 0.129% m-o-m in June, below expectations (Nomura: 0.212%, Consensus: 0.2%).
Key Quotes:
“On a 12-month basis, headline CPI inflation registered 2.872% y-o-y, broadly in line with expectations and up 0.1pp from 2.801% y-oy in May.”
“The downside surprise in headline CPI was due to softer-than-expected gain in food prices (+0.176%) and an unexpected decline in energy services prices which include electricity and gas (-1.464%).”
“Excluding food and energy prices, core CPI rose 0.162% m-o-m in June, broadly in line with expectations (Nomura: 0.202%, Consensus: 0.2%) after rising 0.171% m-o-m in May.”
“On a 12-month basis, core CPI inflation came in at 2.255% y-o-y, matching expectations. The components of core CPI suggest that the underlying pace of core inflation remains steady. Based on June CPI and PPI data, we forecast a modest 0.060% m-o-m increase in core PCE prices in June. If realized, the 12-month change rate of core PCE prices would slow to +1.881% in June from +1.995% in May.”
“We continue to see a gradual pickup in core PCE inflation on a 12-month change basis over the medium term. We expect core PCE inflation to reach 2.1% y-o-y by end2018, 2.2% by end-2019, and 2.4% by end-2020. See Monthly Inflation Monitor, 12 July 2018.”
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