US CPI Preview: Forecasts from 10 major banks, inflation appears to have peaked

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

Annual CPI in the US is forecast to decline to 7.3% in November while Core CPI is expected to edge lower to 6.1% from 6.3%. On a monthly basis, the Core CPI is projected to match October’s print of 0.3%. 

ANZ

“We expect US core CPI to rise by 0.4% MoM in November. Goods prices are trending in a disinflationary/deflationary manner, while CPI rent will remain elevated until mid-2023 and should trend lower thereafter. Key to the inflation outlook will be the prices of services excluding rent. As wages are the largest cost in providing these services, watching labour market trends will be important. Wages growth is above levels consistent with 2% inflation as demand for labour outstrips supply. As supply is slow to adjust, the Fed needs to limit demand. The Fed still has more work to do to achieve its price stability mandate.”

Commerzbank

“The surprisingly sharp drop in the inflation rate fueled hopes that the inflation peak had passed. In fact, we expect a further slowdown in November. The small 0.2% increase in consumer prices from October that we forecast would mean that the YoY rate would fall from 7.7% to 7.2%, moving further away from the high for the year of 9.1% in June. In this context, we assume that gasoline prices fell by just under 2%. Other energy sources such as natural gas and electricity are also likely to have become cheaper. We expect food prices to rise by only 0.5% MoM, after 0.6% in October and rates of 1% in the summer. Price rises for other goods are also down significantly. Only in services (excluding energy and food) is inflationary pressure still increasing. This is mainly due to rents. Thus, the core inflation rate, which excludes energy and food prices, is falling only slowly - probably from 6.3% to 6.1% in November. We reiterate our view that the noticeable decline in the US inflation rate, which is likely to continue next year, should not obscure the fact that the fundamental inflation problem is not being solved. We consider a sustained return to 2% inflation to be unlikely.”

TDS

“We expect November headline CPI to have increased 0.2% MoM, a downshift from 0.4% in October, and for core CPI to have moved up a still strong 0.3% MoM, similar to October. Shelter inflation likely remained the key wildcard, though we look for goods deflation to act again as an offset. Importantly, gas prices are expected to provide relief to the CPI, as they fell in Nov. All told, our MoM forecasts imply 7.3%/6.1% YoY for total/core prices.”

RBC Economics

“A drop in gasoline prices in November has likely sent US inflation growth lower. We expect the US CPI reading to come in at 7.4%. That’s down from 7.7% in October and a 9.0% peak in June. Food inflation was still likely running almost 11% YoY. But a decline in commodity prices means that measure has finally started to turn a corner. Excluding more volatile food and energy products, we expect core CPI held flat on yearly basis at 6.3% while accelerating on monthly basis following a surprise decrease in October. A 0.5% rise in November core prices from October will match the average monthly change this year. But that’s still double the average pre-pandemic pace. Much of that strength continues to reflect surging rent prices from a year ago as higher market asking rents flow through to the CPI rent index. An easing in current market rent prices means those CPI increases will slow in the year ahead.”

NBF

“The food component likely remained strong, but this increase should have been compensated in part by lower gasoline prices. As a result, headline prices could have increased by 0.3% MoM. If we’re right, the YoY rate should come down from 7.7% to 7.3%. the core index, meanwhile, may have continued to be supported by rising rent prices and advanced 0.3% on a monthly basis. This would translate into a three-tick decline of the 12-month rate to 6.0%.” 

SocGen

“We look for a gain of 0.3% MoM in both the headline and the core CPI in November. Energy prices should decline, but that should be offset by rising food prices. We expect used auto prices to continue to fall in November and for many months to come. A further slowing in the YoY trend is expected.” 

Deutsche Bank

“We expect a softer print than consensus with +0.21% unrounded on headline (vs. +0.44% previously and +0.3% consensus) and +0.29% on core (vs. +0.27%, +0.3% consensus). This would leave headline dropping from 7.7% to 7.2% (7.3% consensus) and from 6.3% to 6.1% for core. So a big day for financial markets.”

CIBC

“Oil prices eased off on demand fears in November, translating into relief on gasoline prices for consumers. However, with food inflation still elevated, total monthly price pressures likely decelerated by only a tick, to 0.3%. That would also include pressure in core (excluding food and energy) categories, as strong demand for services, and continued increases in the shelter components, likely offset any relief in core goods prices on improvements in supply chains. Overall, core monthly prices likely maintained a 0.3% pace in November, which is still too fast to achieve a 2% annual pace of inflation. We are in line with the consensus and market reaction should therefore be limited.”

Citibank

“US CPI MoM – Citi: 0.2%, prior: 0.4%; CPI YoY – Citi: 7.2%, prior: 7.7%; CPI ex Food, Energy MoM – Citi: 0.3%, prior: 0.3%; CPI ex Food, Energy YoY – Citi: 6.0%, prior: 6.3%. We expect US core CPI to rise 0.3% MoM (0.29% unrounded) in November, marking the first consecutive sub-0.5% monthly increase in core CPI since September 2021. While the overall pace of core inflation should appear relatively softer in November, weakness, for now, should largely be concentrated in goods prices which could stabilize in 2023 that may also lead to slowing shelter prices.”

Wells Fargo

“We expect to see that inflation in November decelerated to a 0.2% MoM gain, translating to a 7.2% YoY pace. Food prices, at the grocery store and at restaurants, likely continued to rise at a strong monthly pace. However, a decline in energy prices and used car prices look to have dampened the overall gain in price level. Stripping out food and energy, we expect core CPI rose 0.4% in November, still too high, but at least decelerating on a three-month annualized basis. We expect the decelerating trend in inflation to signal that the Fed's rate hikes are working, but for the overall pace to illustrate that the job is not yet done.”