US: Market is looking for a decline in the headline CPI figure - Rabobank

In view of analysts at Rabobank, the US CPI print is one of the key figures to watch today and the market is looking for a decline in the headline figure (from 2.1% y/y to 1.9% y/y) on the back of base effects.

Key Quotes

“The CPI has been running consistently above the PCE deflator since late 2016, but this has not always been the case. The pattern of core CPI inflation exceeding core PCE has been more persistent. Core CPI inflation is expected to edge down to 1.7% from 1.8% in December. If confirmed, this may help soothe some concerns, but it seems fair to say that given the market’s focus on these numbers, any deviation could have a large impact.”

“On top of that, there is some additional uncertainty stemming from changes in methodology for a number of items in the CPI. Adjustments to account for more rapid technological advancement in certain items such as smartphones may have a negative impact on the adjusted prices.”