US: Upside risk to medium-term inflation outlook - Nomura

In view of analysts at Nomura, stronger-than-expected January core CPI poses upside risk to medium-term inflation outlook of the US economy.
Key Quotes
“Core CPI inflation was surprisingly strong, rising by 0.3% (0.349%) m-o-m in January (Nomura: +0.188%, Consensus: +0.2%). The 0.349% m-o-m increase marked the highest gain since March 2005. Its 12-month change rate was unchanged at 1.8% while most in the market had expected a slight slowdown to 1.7% (Nomura: +1.682%, Consensus: +1.7%).”
“Headline CPI rose 0.5% (0.539%) m-o-m, up 2.1% (2.071%) y-o-y, also exceeding expectations (Nomura: +0.369%, Consensus: +0.3%). Certain core components, as usual, provided what appeared to be a temporary boost. Further, some technical factors such as methodological changes and potentially imperfect seasonal adjustment may have amplified acceleration in core inflation. However, the strength was very broad-based, suggesting that the underlying inflation trend might have been picking up.”
“Still we expect a gradual upward path for core inflation over the coming quarters, but today’s CPI data pose upside risks to our inflation outlook. Based on CPI data, we now forecast a 0.241% m-o-m increase (1.48% y-o-y) in core PCE inflation for January.”
Author

Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

















