Is there a draw back danger to the US CPI report later?

On core inflation, a majority of analysts and estimate have it pinned in and round +zero.three% m/m for July. As such, this makes Jefferies’ +zero.246% studying a little bit of an outlier in that sense. The agency says that “continued worth will increase in furnishings, attire, and leisure items aren’t anticipated this month”. Including that “used automotive costs remained principally unchanged regardless of tariff pressures, although seasonal changes might
mirror a slight decline”.

In the meantime, they estimate headline inflation to return in at +zero.172% m/m (vs +zero.20% estimate). Whereas that appears alright on condition that the determine might be rounded, Jefferies is arguing that there could possibly be potential for a draw back danger to the report.

“Airfare stays a risky part; though airways report robust gross sales, these are primarily in premium
cabins, which have restricted affect on CPI. If fundamental financial system fares stay flat, the seasonal adjustment
may nonetheless lead to a 2.5% enhance within the airfare part. Ought to this not materialise, the headline CPI
for the month might spherical right down to +zero.1%.”

So, we have seen UBS publish their view on stronger inflation pressures earlier and over right here we’ve got Jefferies arguing for doubtlessly a bit tamer readings within the report later. Simply be cautious that these are the bookends of the analyst calls forward of the information launch. Everybody else’s forecasts fall in these two and I am going to word a few of the estimates later within the session (h/t @ MNI).

This text was written by Justin Low at investinglive.com.