US CPI Preview: Forecasts from 13 major banks, inflation coming down only slowly

The US Bureau of Labor Statistics will release the Consumer Price Index (CPI) data on Thursday, November 10 at 13:30 GMT and as we get closer to the release time, here are the forecasts by the economists and researchers of 13 major banks regarding the upcoming US inflation print.

Headline CPI is expected to edge lower to 8% in October from 8.2% in September. The Core CPI, which excludes volatile food and energy prices, is forecast to retreat to 6.5% on a yearly basis from 6.6%. On a monthly basis, the CPI is expected to rise by 0.6% while the Core CPI is expected to have advanced by 0.5% last month, which is below September's 0.6% read. 

Commerzbank

“We expect a MoM increase of 0.7% (overall), while the core index excluding energy and food is likely to have risen by a slightly smaller 0.5%, although this would again be a very strong increase. However, since prices had increased even more in October 2021, the YoY rates would then fall slightly from 8.2% to 8.0% and from 6.6% to 6.5%, respectively. The October inflation report should fuel cautious optimism about the inflation outlook and support speculation of a somewhat slower pace by the Fed going forward. We expect a hike of only 50 bps at the next Fed meeting followed by two steps of 25 bps each at the beginning of 2023.”

Danske Bank

“We are looking for another high print at +0.7% MoM / +8.0% YoY.”

TDS

“Headline inflation likely ticked up to 0.6% MoM from September's 0.4% print. Core prices likely slowed modestly in Oct but to a still strong 0.4% MoM pace. Shelter inflation likely remained the key wildcard, though we look for used vehicle prices to retreat sharply. Importantly, gas prices likely shifted from offering relief to the CPI in recent months to contributing to it in Oct. All told, our MoM forecasts imply 7.9%/6.5% YoY for total/core prices.”

Deutsche Bank

“We believe energy will boost the headline (DB forecast at +0.62% vs. +0.39% previously.). Last month's core surprised on the upside (+0.6% MoM, vs +0.4% consensus) so this month’s reading will get the most focus (DB at +0.46% vs. +0.58% previously.). In terms of YoY, We expect headline to dip -0.2pp and core -0.1pp to 8.0% and 6.5%, respectively.”

RBC Economics

“The next inflation reading from the US will still be way too high to prevent another round of interest rate hikes. YoY consumer price growth is expected to edge lower, to 8.0% in October from 8.2% in September. But that is despite an expected large 0.7% MoM increase.”

NBF

“Rising gasoline prices, combined with another significant rise in the cost of food, could translate into a 0.7% gain for the headline index. Despite this increase, the 12-month rate could still come down from 8.2% to 8.1%, pulled down by a sizeable negative base effect. The core index, meanwhile, may have continued to be supported by rising rent prices and advanced 0.5% on a monthly basis. The YoY figure could remain unchanged at 6.6%.”

ING

“The focus is on the MoM core (ex-food and energy) number. Over the past six months, we have had one 0.7%, four 0.6% and one 0.3% print. We need to see numbers closer to 0.2% to bring the annual rate down toward the 2% target over time. The consensus right now is for 0.5% next week, which is also our prediction. There is a second bite of the cherry ahead of the December FOMC meeting on 14 December given November CPI is published on 13 December. Nonetheless, if we get a downside surprise we could see markets looking to price in a greater chance of a 50 bps December hike and possibly a slightly lower terminal rate.”

ANZ

“We expect US core CPI to rise by 0.4% MoM in October. Higher energy and food prices should result in headline inflation increasing by 0.7%. There are encouraging signs that price pressures are easing in some goods and services, but they remain too elevated. The cost of new rentals is easing, new and used car prices are softening, and health insurance premiums are set to fall from October. Wage growth looks to have peaked as the Employment Cost Index has eased across multiple industries in Q3. However, wage growth remains well in excess of what is needed to get 2% inflation. Although the Fed may soon slow the pace of its tightening, there remains much more work to be done as it remains singularly focused on inflation.”

CIBC

“The relief from higher prices at the pump ended in October, as prices climbed into mid-month, with OPEC+ announcing supply curtailments. Combined with broad price pressures in other categories, the total CPI likely accelerated to 0.7% on the month, leaving the annual rate of inflation lower at 8.0%. Excluding food and energy, core prices likely remained heated with a 0.5% gain on the month, reflecting continued pressure in the shelter price index as leases reset at higher rates, lagging housing market developments. High demand for other services likely added to that pressure, however, some easing in core goods prices could have been masked by the headline, as industry gauges of used car prices have fallen along with the fading of supply chain issues in that sector. We are in line with the consensus and market reaction should therefore be limited.”

BMO

“We expect both headline (+0.7%) and core (+0.5%) to print uncomfortably high monthly CPI readings, keeping the former at 8.0% YoY, and the latter at 6.6% YoY.”

Citibank

“After two months of strong 0.6% MoM increases in core CPI, we expect a somewhat more modest increase of 0.43% MoM in October. Meanwhile, headline CPI should rise 0.6% MoM in October, the strongest headline increase since June as retail gas prices rose again on average throughout the month.”

Wells Fargo

“While the headline index is expected to slip to 8.0% YoY, we look for the monthly gain to strengthen to 0.6%. We expect to see a rebound in the price of gasoline and a still-high, albeit moderating, rate of food inflation drive the headline increase. Core inflation is likely to slow a touch, but remain uncomfortably high with a 0.5% monthly increase. While softer core inflation in October, if realized, would indicate that inflation is at least no longer worsening, a return to the Fed's 2% target remains a long way off and will keep the Fed in tightening mode for some time.”

BofA

“Headline CPI likely increased by 0.5% MoM in October, owing in part to the first increase in energy prices in four months. On a YoY basis, headline inflation should fall from 8.2% in October to 7.8%. Core CPI, meanwhile, should moderate from 0.6% MoM to 0.4% MoM. This would result in YoY inflation falling from 6.6% to a still elevated 6.4%.”