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Key CPI preview – Nomura

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.

Key Quotes:

“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).”

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