US: Core inflation to pick up only gradually - Nomura

Analysts at Nomura note that the US CPI rose 0.171% (0.2%) m-o-m in July, in line with the market consensus of 0.2%, but slightly weaker than their forecast of 0.227%.

Key Quotes

“Excluding food and energy prices, core CPI inflation accelerated to 0.2% (0.243%) m-o-m, close to our forecast of 0.260% but slightly above the market consensus of 0.2%, from 0.162% m-o-m in June. As a result, the y-o-y change of core CPI inched up to 2.4% (2.354%) from 2.3% (2.255%).”

“Looking at the details, many subcomponents rebounded in July as we had expected, but prices of certain goods dropped sharply, partly due to a small sample and/or policy changes. Looking through short-term fluctuations, we do not think that Friday’s CPI report has a meaningful impact on our medium-term inflation outlook.”

“We continue to expect core inflation to pick up only gradually (Figure 1). Our estimate for the July core PCE inflation is +0.192% m-o-m, which would push up its y-o-y change to 2.0% (1.998%) from 1.9%.”