US Inflation Set To Cool, But The Struggle Is Not Over Yet
- January's headline CPI forecast at 6.2% (prev 6.5%) Y/Y
- Persistent volatility in energy and food costs underpinning prices
- High rent to hamper the decrease in core inflation
- Report due Tuesday at 13:30 GMT (08:30 EDT)
By Selin Gücüm
LiveSquawk News
13 February 2023 | 18:00 GMT
US inflation is expected to have slowed further in January, well above the Federal Reserve’s 2% target, and therefore high enough to necessitate further rate hikes from the central bank.
Analysts forecast the monthly consumer price index to rise 0.5% from 0.1% M/M, the first increase in three months. The annual inflation rate is expected to reflect a moderate decline to 6.2% from 6.5%.
In the 12 months to January, core inflation is expected to have cooled to 5.4% from 5.7%. On the month, core inflation is forecast to rise 0.4% on high rent and used car prices.
Analysts at ING Economics wrote, “Auto sales and shelter should contribute [putting] a floor under core inflation for now, but we think these two components will start declining more sharply from the mid-second quarter, which should fuel a more sustained downward trend in inflation."
Nevertheless, it is still too early to be optimistic following January’s stellar nonfarm payroll number. The US reported the creation of more than a half million jobs last month, blunting the notion of a cooling economy.
Economists foresee at least a 25-basis point hike at the 22 March FOMC meeting with a further quarter point in May.
When asked recently about the strong jobs number, Fed Chair Jerome Powell said that "It kind of shows you why we think this is a process that will take a significant period of time.
“I think it underscores the message […] that we have a significant road ahead to get inflation down to 2%."
The unexpected labour market report has pushed Barclays’ analysts to change their Fed outlook. “After the June increase, we now expect the FOMC to remain on hold until December when we expect a 25bp cut.”
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- January's headline CPI forecast at 6.2% (prev 6.5%) Y/Y
- Persistent volatility in energy and food costs underpinning prices
- High rent to hamper the decrease in core inflation
- Report due Tuesday at 13:30 GMT (08:30 EDT)
By Selin Gücüm
LiveSquawk News
13 February 2023 | 18:00 GMT
US inflation is expected to have slowed further in January, well above the Federal Reserve’s 2% target, and therefore high enough to necessitate further rate hikes from the central bank.
Analysts forecast the monthly consumer price index to rise 0.5% from 0.1% M/M, the first increase in three months. The annual inflation rate is expected to reflect a moderate decline to 6.2% from 6.5%.
In the 12 months to January, core inflation is expected to have cooled to 5.4% from 5.7%. On the month, core inflation is forecast to rise 0.4% on high rent and used car prices.
Analysts at ING Economics wrote, “Auto sales and shelter should contribute [putting] a floor under core inflation for now, but we think these two components will start declining more sharply from the mid-second quarter, which should fuel a more sustained downward trend in inflation."
Nevertheless, it is still too early to be optimistic following January’s stellar nonfarm payroll number. The US reported the creation of more than a half million jobs last month, blunting the notion of a cooling economy.
Economists foresee at least a 25-basis point hike at the 22 March FOMC meeting with a further quarter point in May.
When asked recently about the strong jobs number, Fed Chair Jerome Powell said that "It kind of shows you why we think this is a process that will take a significant period of time.
“I think it underscores the message […] that we have a significant road ahead to get inflation down to 2%."
The unexpected labour market report has pushed Barclays’ analysts to change their Fed outlook. “After the June increase, we now expect the FOMC to remain on hold until December when we expect a 25bp cut.”