US: PCE deflators likely to increase by 0.191% in March - Nomura

Incorporating March CPI and PPI data, analysts at Nomura expect a 0.191% m-o-m increase in the US core PCE price index for March after a 0.228% gain in February.

Key Quotes

“On a y-o-y basis, we expect a 1.9% (1.917%) y-o-y advance, up from 1.6% in February. Because of slowing in the PPI’s hospital services inflation in March, the contribution from medical care components to m-o-m core PCE price inflation will likely be more modest in March than in February. However, stronger-than-expected rent and lodging-away-fromhome prices appear to partly offset weak inflation of medical care related prices. That said, on a y-o-y basis, the positive base effect should push up core PCE inflation by almost 0.3pp in March. After the boost from this base effect, we expect a more gradual acceleration in core PCE inflation.”

“Among non-core components, we expect a solid increase in PCE food prices, while PCE energy prices will likely decline notably reflecting declines in various energy prices in March. Altogether, we expect a 0.063% m-o-m increase in the aggregate PCE price index, equivalent to 2.1% (2.046%) y-o-y growth.”