US CPI Preview: Forecasts from 10 major banks, inflation to extend downward trend

The US Bureau of Labor Statistics (BLS) will release the most important inflation measure, the US Consumer Price Index (CPI) figures, on Thursday, January 11 at 13:30 GMT. As we get closer to the release time, here are the forecasts by the economists and researchers of 10 major banks regarding the upcoming United States inflation print for December.

Headline CPI is expected to pick up a tick to 3.2% year-on-year while core is expected to fall two ticks to 3.8% YoY. On a monthly basis, headline inflation is seen at 0.2% while core CPI is expected at 0.3% for the second consecutive month.

TDS

We look for core inflation to slow down to 0.1% MoM from 0.3% in Nov, with the headline likely strengthening a tenth to 0.2%. Our unrounded core CPI forecast at 0.14% MoM suggests it will be a close call between a 0.1% and a 0.2% gain. The report is likely to show that used vehicle prices were a large drag on inflation, while OER/rents are expected to head modestly lower.

Deutsche Bank

We expect headline CPI (0.26%) to come in roughly in line with core (0.28%). This would equate to 3.9% and 3.3% YoY, a tenth ahead of consensus. We were at 4.0% and 3.1% last month. So core is not yet breaking through 3% on the downside and the 3 and 6m annualised rates are also likely to stay slightly above this mark.

ANZ

We expect core CPI inflation to have risen 0.2% MoM in December. A similar increase is expected for headline, although energy price volatility pose downside risks.

NBF

Food and shelter prices are expected to rise again, while a drop in gasoline prices should translate into a decline in the energy component. All of this could result in a 0.2% increase in prices on a monthly basis. If we're right, the YoY rate could rise from 3.1% to 3.2%. Core prices, for their part, could show a 0.3% monthly progression. On a 12-month basis, core inflation should still decline a tick from 4.0% to 3.9%. 

SocGen

We expect a 0.2% headline increase and a 0.3% core CPI increase for December. Our more precise forecasts are for a 0.23% increase for the headline rounding down and a 0.28% increase on core rounding up. Energy prices help to suppress the headline increase but are not the drag they have been in the previous two months. We expect energy to be up 0.2%, while food-at-home prices are likely to climb 0.15%.

RBC Economics

We look for US CPI growth to show further signs of moderation in December, notwithstanding a likely tick higher in the YoY rate of headline price growth to 3.2% from 3.1% a month earlier. That small increase should be entirely explained by a smaller YoY decline in energy prices. We expect YoY price growth in core (excluding food and energy) products to slow to 3.8% from 4.0% on a more ‘normal’ looking 0.2% monthly (seasonally adjusted) increase from November. With price growth trending in the right direction and signs that economic growth is slowing, the Fed is widely expected to pivot to interest rate cuts in the first half of this year. Our own forecast assuming the first decrease comes in Q2.

Wells Fargo

We look for Thursday’s CPI report to show that inflation continues to slow on trend in a way that positions the FOMC to start cutting rates in June. We expect a 0.2% increase in headline CPI and a 0.3% increase in the core. Energy prices were more stable last month and are unlikely to repeat the major declines that occurred in October and November. We expect the disinflation in core goods to continue amid demand normalization, healthier supply chains and the fall in commodity prices from their peak. Core services inflation should also slow modestly relative to November, led by softer price increases for primary shelter.

Commerzbank

The information available to us on individual goods and services points to a change in consumer prices of around 0.25% compared to the previous month, both for the headline rate and for the core rate, which excludes energy and food. Whether the figure published by the statisticians, rounded to one digit, will be 0.2% or 0.3% cannot be clearly assessed on this basis. In terms of YoY rates, headline inflation could even increase slightly from 3.1% to 3.2%. In any case, we expect the core rate to fall, this time from 4.0% to 3.8%.

ING

We think the CPI report will show a soft print this month, given falling gasoline prices and more benign housing rent data. Core CPI is set to break below 4% YoY for the first time since May 2021, and this will give the Federal Reserve added confidence that inflation is on the path to sustainability reaching the 2% target by mid-2024.

CIBC

We expect headline and core prices both to rise by 0.3% MoM in the month. Core goods prices should show a somewhat weaker disinflationary impulse but services inflation will edge down to keep core inflation very close to the Fed’s target on a monthly basis. Our views on core inflation are slightly above consensus but it’s getting harder to get excited about CPI surprises given the progress observed on inflation over the past six months. We are now out of the territory where one report could change the FOMC’s thinking about near-term policy choices and markets understand this.