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Analysts at Nomura expect a trend-like 0.202% m-o-m increase in US core CPI inflation in June and on a 12-month basis, they expect core CPI inflation to inch up to 2.272% from 2.237%, previously.

Key Quotes

“On positives, we expect airline fares to have rebounded in the month after two consecutive m-o-m declines, give the lagged impact of higher jet fuel prices. Moreover, while structural factors point to continued downtrend in used vehicle prices, we think this downward pressure may have paused in June.”

“On negatives, the prices of lodging away from home likely fell sharply, after three consecutive month-onmonth increases. This measure displays a high degree of mean reversion and could swing back from gains in previous months. In addition, prices of prescription drugs jumped sharply in May. We think this index likely fell in June.”

“For non-core components, we expect an above-average 0.28% m-o-m increase in food prices, driven by a pickup in food at home prices, while food away from home prices likely increased at a trend-like pace. Energy prices likely increased at a more modest 0.2% m-o-m pace than in April (+1.4%) and May (+0.9%), as retail gasoline prices leveled out.”

“Altogether, we expect headline CPI to increase to 0.212% m-o-m (2.942% y-o-y). Our forecast for CPI NSA is 252.161.”