19 Jun 2015
US core CPI to accelerate gradually – Nomura
FXStreet (Barcelona) - Reviewing the US CPI inflation data release, Research Analysts at Nomura, note that the below expected core CPI is not indicative of a weak trend, and a gradual acceleration ahead might be seen.
Key Quotes
“The Consumer Price Index (CPI) rose by 0.4% (0.44%) m-o-m in May, slower than the market consensus of +0.5% and our forecast of +0.6% (+0.58%). The year-over-year change rate inched up to 0.0%, from -0.2% in the previous month.”
“Although some energy components were weaker than expected, the negative surprise was partially attributable to core CPI, which rose by only 0.1% (+0.145%), compared with our expectation of 0.2% (+0.22%). The weaker-than-expected core CPI drove down its 12- month change rate to 1.7% from 1.8% previously.”
“Given the strong increase in medical care service prices in April and the unexpected firming of core goods prices in the three months leading up to May, some deceleration in core inflation seemed inevitable. However, the slowdown in core inflation was greater than we had expected. (Note that core CPI rose strongly at the pace of 0.23% and 0.26%, respectively, in March and April before decelerating to 0.15% in May.)”
“By component, inflation of core goods as well as services decelerated in May. However, as the deceleration in core inflation was likely a reflection of a negative payback of the recent firming and was not indicative of a new weak trend, we continue to believe that core inflation will accelerate gradually going forward. Specifically, we think that core CPI will likely increase at a pace of 0.16-0.20% in the near term.”
Key Quotes
“The Consumer Price Index (CPI) rose by 0.4% (0.44%) m-o-m in May, slower than the market consensus of +0.5% and our forecast of +0.6% (+0.58%). The year-over-year change rate inched up to 0.0%, from -0.2% in the previous month.”
“Although some energy components were weaker than expected, the negative surprise was partially attributable to core CPI, which rose by only 0.1% (+0.145%), compared with our expectation of 0.2% (+0.22%). The weaker-than-expected core CPI drove down its 12- month change rate to 1.7% from 1.8% previously.”
“Given the strong increase in medical care service prices in April and the unexpected firming of core goods prices in the three months leading up to May, some deceleration in core inflation seemed inevitable. However, the slowdown in core inflation was greater than we had expected. (Note that core CPI rose strongly at the pace of 0.23% and 0.26%, respectively, in March and April before decelerating to 0.15% in May.)”
“By component, inflation of core goods as well as services decelerated in May. However, as the deceleration in core inflation was likely a reflection of a negative payback of the recent firming and was not indicative of a new weak trend, we continue to believe that core inflation will accelerate gradually going forward. Specifically, we think that core CPI will likely increase at a pace of 0.16-0.20% in the near term.”