There is two key data point’s on Friday and the analysts at Nomura offered a preview for the CPI, as being one of them after today’s PPI prelude and Wednesday’s FOMC minutes that showed Fed members are concerned about low levels of inflation.
“Given higher energy prices and a decent increase in core components, we expect headline CPI to rise strongly by 0.7% (0.672%) m-o-m in September, which would translate into y-o-y rate of 2.3% (2.346%) on a y-o-y basis (Consensus: 0.6% m-o-m, 2.3% y-o-y).
Excluding food and energy, we expect core CPI to rise decently by 0.2% (0.235%) m-o-m for September (Consensus: 0.2%), following a 0.248% gain in August.
While the recent hurricanes pose greater-than-usual uncertainty, we think that the landfall and aftermath of Hurricanes Harvey and Irma point to upside risks to core inflation. If our forecast is realized, the 12-month change of core CPI would inch up to 1.8% (1.805%) from 1.7% (1.687%) (Consensus: 1.8%).
While we see some downside risks to the medium-term inflation outlook, the transitory boost due to the hurricanes likely pushed up core inflation in September. Our forecast for CPI NSA is 247.091 (Consensus: 246.920).”