Upbeat expectations for core CPI in the US

According to Bloomberg surveys, the monthly increase in the headline Consumer Price Index is estimated to have accelerated from 0.1 percent to 0.2 percent, while the annual increase accelerated from 3.1 percent to 3.2 percent. US December consumer inflation data will be released today at 16:30 GMT. According to Bloomberg surveys, the monthly increase in the headline Consumer Price Index is estimated to have accelerated from 0.1 percent to 0.2 percent, while the annual increase accelerated from 3.1 percent to 3.2 percent. Annual core inflation is projected to have fallen to 3.8 percent, its lowest level since May 2021. Bloomberg Economics (BE) also expects the December core CPI data to provide confidence that the Fed is making encouraging progress in reducing inflation. According to BE US Chief Economist Anna Wong, holiday sales and disinflation from China likely led to lower prices for core goods in December, with a modest decline in prices for core services. “We still think the pace of CPI growth is closer to 3% than the Fed’s 2% target,” Wong said. “The disinflationary impact on core goods is expected to ease in the second half of the year as companies finish clearing excess inventory. Lagging wage growth, driven by some sharp minimum wage increases on the horizon, will have some impact on reducing inflation in core services excluding housing,” Wong said. “The December inflation report is likely to be positive, but it’s too early to say the final stretch of disinflation will be easy. However, the Fed could afford to cut interest rates as it becomes more concerned about its maximum employment target — and in fact, our baseline scenario is for the Fed to cut rates in March,” she said.