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Analysts at Nomura expect US June headline CPI to rise by 0.2% (0.212%) m-o-m, pushing up its 12-month change to 2.9% (2.94%) from 2.80% previously.

Key Quotes

“Among non-core components, usually volatile energy prices appear to have been relatively stable during the month, while food prices likely increased steadily by 0.3% m-o-m. Excluding food and energy, we expect core CPI to increase by 0.2% (0.202%) m-o-m in June, slightly above the 0.171% pace in May, but essentially the same as its six-month average.”

“A 0.202% increase would translate into a change of 2.3% (2.272%) y-o-y, 0.1percentage point (pp) higher than in May. Some of the negative payback from unusually large increases of certain components in May, such as prescription drug and lodging-away-from-home prices, will likely be offset by higher airline fares and a smaller decline in used vehicle prices.”

“Measures of underlying trend inflation suggest that core inflation tends to converge to a narrow range of 0.16-0.21% m-o-m even if it deviates temporarily. We expect a trend-like pace of core inflation in June. Overall, our forecast for CPI NSA is 252.161.”