US: Focus on CPI today – Nomura

Analysts at Nomura point out that US core CPI surprised on the upside in January, rising by 0.349% m-o-m, but some of the strength in core CPI inflation in January seemed to be attributable to transitory factors.

Key Quotes

“We expect core CPI inflation to return to a more trend-like increase of 0.2% (0.203%) m-o-m in February, which translates into the y-o-y change of 1.9% (1.879%), slightly up from 1.8% (1.821%) previously. We view the risk to our core CPI forecast as roughly balanced. In the near term, core inflation on a 12-month basis will likely move up by a couple of tenths as the negative impact from a sharp decline in wireless telephone service prices will drop up out of the calculation in March. However, beyond that, we continue to expect core inflation to rise only gradually. As for non-core components, energy prices likely fell slightly by 0.2% m-o-m in February, while food prices appeared to rise modestly by 0.1% m-o-m. Altogether, our forecast for CPI NSA is 249.024.”