US CPI Preview: Forecasts from eight major banks, off the highs but still off the chart

Consumer Price Index figures for August, scheduled for release at 12:30 GMT, are forecast to show an increase of 5.3% on the headline and 4.2% on the core. That would represent a minor decline, but still high price pressures. Here you can find the forecasts of economists and researchers of eight major banks, regarding the upcoming US inflation data.

If high inflation persists, the greenback could gain even more ground, according to FXStreet’s Analyst Yohay Elam.

ING

“Headline CPI is likely to remain close to 5.5% YoY with core inflation remaining at 4.3%. Given ongoing supply issues, rising labour costs and a clear sense of strong corporate pricing power, we see little reason for inflation to fall meaningfully before 2Q 2022. The risk is that rising inflation expectations keep it higher. Consequently, we continue to look for the Federal Reserve to conduct a swift taper with asset purchases ending in 2Q and interest rates increasing from late 2022 onwards.”

TDS

“Our 0.4% MoM forecast for the overall CPI in this week's report for August matches consensus, but our 0.2% forecast for core prices is below the 0.3% consensus. Used vehicle prices, which have been surging, likely declined. Other travel items probably slowed as well. Our forecast is 0.36% total/0.15% core before rounding, so we see more risk of 0.3%/0.1% than 0.5%/0.3%.”

RBC Economics

“We expect US inflation to hold at 5.4%, even as monthly price growth eases. However, focus will be on month-over-month growth for signs of further moderation after slowing to 0.4% from an average of 0.7% the prior three months.”

NBF

“The annual core inflation rate could remain unchanged at 4.3%. Headline prices, for their part, could have risen 0.4% MoM, helped by an increase in seasonally adjusted gasoline prices. This gain would translate into a one-tick decline of the annual rate to 5.3%.”

ANZ

“We expect US core inflation to have risen by 0.3% MoM (4.3% YoY) in August. The Fed’s latest Beige Book and surveys of manufacturers continue to highlight considerable supply bottlenecks. Notably, limited chip supplies have resulted in a shortage of new cars and this is flowing through to higher prices. Wages in leisure-related industries are increasing at a rapid clip and are seemingly being passed through to consumers. The inflation break-even curve has flattened in the past month or so as yields on shorter-dated inflation compensation measures have fallen.”

SocGen

“There are other pressures, but the 5.3% YoY increase in the CPI largely stems from auto prices and gas prices. Energy prices have a long history of large fluctuations upward and downward. We assume energy prices can fade. Our oil price forecast is stable. Our forward-looking concerns on inflation are rents. Our concern is that savings and tighter labor markets could accelerate rental costs. This would be a sign of more permanent inflation. So far, evidence lies more in the transitory side, but we remain watchful.”

Deutsche Bank

“We are expecting a slowdown in the MoM reading in August, and their forecasts for CPI of +0.4% and core CPI of +0.2% in August would be the slowest in six months. This would bring the YoY rates down to 5.3% and 4.1% respectively.” 

CIBC

“A rise in gasoline prices in August combined with upwards pressure on food prices likely resulted in total CPI advancing by 0.4% on the month. That would have left the annual rate of inflation unchanged at 5.4%. Excluding energy and food prices, core prices could have advanced by 0.3% on the month as supply chain bottlenecks and previous wage increases could have translated through to consumer prices, leaving annual core inflation a tick weaker at 4.2%. One downside risk is a drop in used car prices potentially being more significant than suggested by industry sources. Given the softening underway in service sectors as a result of the Delta wave, it’s likely that inflation in that area eases off over the rest of the year, causing core inflation to decelerate along the way.”