CPI on deck, brace for impact.
So this is the only thing that really matters this week on the data front. Although it doesn’t have the same air of urgency as it did last month (see here), that may be a bad thing in the event we get an upside surprise — especially ahead of the Fed and in light of recent hawkish commentary from previously reliable dove Lael Brainard.
Everyone will either forget all about this in 30 minutes or it will be all anyone’s talking about for the rest of the week. It’s a pretty binary scenario in terms of the fallout, although they’ll be a lot of people parsing it for Fed implications even if the reaction isn’t dramatic.
For those who missed it, here’s Goldman’s take:
We estimate a 0.19% increase in February core CPI (mom sa), which would leave the year-over-year rate unchanged at +1.8%. Our forecast reflects strength in shelter categories and lodging away from home but also sequential deceleration in used car prices and a pullback in the legal services subcomponent. We do not expect a reversal of January’s sharp increases in the apparel category, which we believe reflected normalization in prices following a highly promotional holiday season. Similarly, we expect medical care prices to rise further, albeit at a slower pace. We estimate a 0.16% increase in headline CPI, reflecting a decline in utility prices.
And here’s BofAML:
Core CPI is likely to see a slower 0.2% (0.18% unrounded) mom gain in February, following January’s robust 0.3% (0.35% unrounded) pick up. This would allow yoy core CPI to tick up to 1.9% from 1.8% on a seasonally adjusted (sa) basis, but leave it at 1.8% nsa. The surprise strength in the last report was driven by particular gains in apparel and medical services, the former category sensitive to the residual seasonality phenomenon. This month, we expect a reversal in both, which will weigh on both core commodities and core services inflation. Transportation services are also likely to see a payback after an outsized gain in motor vehicle insurance drove the index higher in January. Elsewhere, we expect steady shelter inflation as tighter labor markets and gradually accelerating wages supports rents.
Without further ado…
Estimates and priors:
- US CPI MoM, est. 0.2%, prior 0.5%
- US CPI Ex Food and Energy MoM, est. 0.2%, prior 0.3%
- US CPI YoY, est. 2.2%, prior 2.1%
- US CPI Ex Food and Energy YoY, est. 1.8%, prior 1.8%
- US CPI Index NSA, est. 248.9, prior 247.9
- US CPI Core Index SA, est. 255.8, prior 255.3
- CPI rose 0.2% vs est. 0.2%, according to the BLS.
- Forecast range from 0.0% to up 0.3% from 71 estimates
- Ex. food, energy up 0.2% vs est. 0.2%
- CPI Y/y rose 2.2% vs est. 2.2%
- CPI NSA index level at 248.991