US: Headline CPI increased by 0.2% m-o-m in November - Nomura

Research Team at Nomura notes that the US headline CPI increased by 0.2% (0.200%) m-o-m in November, broadly in line with expectations (Nomura: 0.197%, Consensus: 0.2%).

Key Quotes

“For non-core components, energy prices came in a little stronger, increasing 1.2%, compared with our forecast of 0.8%. Among energy components, a 2.6% gain in motor fuel prices exceeded our expectation of 1.9%. By contrast, a flat reading of food prices was essentially in line with our forecast.”

“Excluding food and energy prices, core CPI inflation was essentially unchanged from the previous month at 0.151% m-o-m, which was close to our forecast of 0.154% (Consensus: +0.2%). However, the composition of core CPI inflation was a little disappointing. Core goods prices showed a broad-based weakness and while core services prices grew at a solid rate, some of the better inflation was likely due to temporary factors.”

“Taking into account the methodological differences between the PCE price index and CPI, we expect core PCE inflation to decelerate to 0.06% m-o-m in November from an increase of 0.11% in October and its three-month average of 0.136%. That would keep the y-o-y core PCE inflation at 1.7%, which matches the median of the FOMC participants’ projections for Q4 2016. Incoming information supports our view that core PCE inflation will pick up but only at a gradual pace.”