us july 2018 cpi - preview
table top

Wednesday, 8 August 2018


  • US July CPI is forecast to rise 0.2pct m/m, 3.0pct y/y
  • A 3.0pct annual rate would be the highest since Dec 2011 - BLS
  • Core CPI is estimated at up 0.2pct m/m, 2.3pct y/y


The most significant piece of US data in what's been so far an uneventful summer week comes on Friday with the US Consumer Price Index (CPI), which is forecast to rise 3.0pct year on year in July from 2.9pct in June.


If the annual rate hits 3.0pct, CPI will be at the highest since December 2011, according to the Bureau of Labor Statistics (BLS). The US Department of Labor releases CPI on Friday, 10 August at 1230 GMT. The core rate, excluding food and energy, is expected to rise 0.2pct, resulting in an unchanged 2.3pct year on year.


JP Morgan's forecast matches the core consensus, but not the overall market view, with its economists instead looking for a 2.9pct yearly rate.


"We think that energy prices in the CPI declined 0.3pct in July, in part because of lower gasoline prices," they said, adding that it is forecasting a 0.1pt pick-up in food given mixed price changes across a variety of food products.


"For the ex.-food and energy core CPI, we look for a 0.20pct increase in June. If realized, this should keep the core measure up 2.3pct equaling the highest year-ago rate reported so far this expansion (after rounding to one decimal)," they said.


The core rate rose to 2.1pct in March 2018 after three consecutive months at up 1.8pct. In 2017, from May to September, the rate was up 1.7pct before inching to up 1.8pct and then back down to growth of 1.7pct in November.


JP Morgan looks for medical prices to continue to follow its upward trend, up 0.2pct in July after rising 0.4pct in June, its highest level in almost two years, and that communications prices could stay at higher levels the last two months after trending downards most of the last decade. In other sectors, it says apparel prices should stay unchanged, "putting the recent downtrend on hold," and that rent, airfares and vehicle sales will add upward pressure to the headline figures. Lodging may ease for the month.


Any surprises in the US July Producer Price Index (PPI) on Thursday, 9 August (1230 GMT) could influence sentiment going into CPI. PPI is forecast to rise 0.2pct month on month v up 0.3pct in June, and estimated at 3.4pct annually, which is unchanged from the month prior. Core PPI is also seen rising 0.2pct m/m and staying at June's 2.8pct rate.


Stephanie Sprague, Princeton, NJ - LiveSquawk News


table bottom