Ok, who’s ready for CPI?
Wednesday was somewhat tumultuous early thanks to Donald Trump losing his mind on Twitter first thing in the morning, so here’s hoping the inflation data doesn’t do anything to destabilize the situation further.
BofAML reminds you what to expect here:
The disappointing slowdown in core CPI inflation last year was partially attributed to a one-off shock in wireless telephone services, which have up until now weighed on yoy inflation. In the upcoming March release, that drag will roll off the calculation leading to a sharp improvement. Our forecast of 0.2% core CPI allows for yoy inflation to jump to 2.1% from 1.8%. Not only was March weak, but subsequent months were also disappointing as core CPI stumbled through a soft patch. Thus, as long as inflation remains firm we will continue to see favorable base effects beyond March, allowing for further acceleration in % yoy inflation.
Ok, so it’s all about cell phones. But as Cameron Crise cautions, we still can’t ignore this. “That the annual rates of inflation on both a headline and core basis will jump has been well-flagged, but that doesn’t mean that we can merely write off the ‘rising inflation’ narrative as a year-old relic of Verizon’s pricing practices [and] indeed, if we look at high frequency rates of change, the results are a bit startling,” Crise writes on Wednesday morning, before explaining that the “the 3m/3m rate of change in core CPI is annualizing at around 2.75% and a clean 0.2% monthly rise in today’s data will push that to 3%.”
This will all be considered in light of yesterday’s hotter-than-expected wholesale inventories and of course with March payrolls in mind, which were an abysmal disappointment on the headline. AHE was in line with consensus, which kind of leaves us in limbo as far as the status of “Goldilocks” and, by extension, the remnants of the low vol. regime.
Without further ado…
Estimates and priors:
- US CPI MoM, est. 0.0%, prior 0.2%
- US CPI Ex Food and Energy MoM, est. 0.2%, prior 0.2%
- US CPI YoY, est. 2.4%, prior 2.2%
- US CPI Ex Food and Energy YoY, est. 2.1%, prior 1.8%
- CPI fell 0.1% vs est. 0%
- Ex. food, energy up 0.176%; est. 0.2%
- CPI Y/y rose 2.4%; est. 2.4%
- CPI ex. food, energy rose 2.1% Y/y after rising 1.8% last month