US CPI preview: to slow to a pace of 0.1% - Nomura

Analysts at Nomura previewed the forthcoming US CPI and expect core CPI m-o-m inflation to slow to a pace of 0.1% (0.134%) in March (Consensus: 0.2%) after a trend-like increase of 0.2% (0.182%) in February. 

Key Quotes:

"Core CPI inflation over the prior two months was boosted by sizable gains in apparel prices which jumped 1.7% m-o-m in January and 1.5% m-o-m in February."

"We think a reversal of the gains in apparel prices will hold down aggregate core CPI inflation in March."

"Despite our conservative m-o-m core CPI inflation forecast, given that core inflation dropped sharply in March last year, the positive base effect is likely to push up y-o-y core CPI inflation to 2.1% (2.069%) in March (Consensus: 2.1%), from 1.8% (1.848%) in February."

"On non-core components, we think food prices increased, reflecting a rebound in foodat-home prices, consistent with today’s PPI reading for finished consumer food prices. However, lower gasoline prices should offset this positive impact."

"Overall, we expect headline CPI to decrease by 0.1% m-o-m (0.066%, Consensus: +0.0% m-o-m), which translates to 2.3% (2.346%) on a 12-month basis (Consensus: 2.4%). Our forecast for CPI NSA is 249.520 (Consensus: 249.576)."

"Note we updated our headline CPI forecast (but not core) after today’s PPI release."