Oil prices have peaked, a damper on G10 CPI - Nomura
|Analysts at Nomura explained that as oil prices have risen significantly from their January/February 2016 lows, there have been large positive energy contributions in January/February CPI numbers.
Key Quotes:
"The key narrative going forward is that the year-on-year changes in oil prices have peaked, and should decline through 2017, unless there is a sustained rally in oil prices."
"This would significantly pull down headline inflation rates from February’s number onwards, particularly in the prints into June 2017 – even if oil prices do not decline further (or even gradually increase)."
"Our estimates show that even if oil prices remain at current levels, energy prices will significantly lower headline inflation across most of the G10 in the coming months. In the US this takes 1.35pp off US headline CPI by June."
"The corresponding number for the eurozone is 0.6pp (0.9pp by April next year). We see similar numbers across most of the G10, with the notable exception of Japan where energy base effects are positive."
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