US: Headline CPI likely to have risen 0.4% in October - RBS

Research Team at RBS, expects the US headline CPI measure to have risen by 0.4% m/m in October, which would push the year/year figure to 1.7%.

Key Quotes

“The mild upswing in energy prices through mid-October could have caused the CPI energy component to have advanced by almost 3% last month.According to AAA, prices at the pump rose by about 1.6% on an unadjusted basis.The October seasonal factor for the gasoline in the CPI is the second most accommodative in a year (therefore expecting a large decline).As a result, the month-to-month increase in gasoline prices after seasonal adjustment looks to have topped 6%.Electricity prices, which account for a little more than 40% of the CPI energy component, could have been little changed following a 0.7% jump in September.Meanwhile, natural gas prices as well as fuel oil prices could have edged up once again.We forecast a tepid 0.1% rise in food prices in October, restrained by lower prices for eggs and meat products.”

“The 0.1% gain recorded by the core CPI in September was tepid relative to the 0.3% jump recorded in August.In October, we look for the core measure to have inched up, perhaps by 0.17% (+0.166% unrounded). A realization of our forecast would leave the year/year metric for this component unchanged at 2.2% in October.The September rise in the core measure was led by key shelter categories: owners’ equivalent rent (0.4%), residential rent (0.3%), and hotel fares (1.0%). In October, we expect these categories to have posted somewhat more modest advances, with the primary residence rent and OER categories each advancing by 0.3% and hotel fares up 0.4% in October. Airfares, on the other hand, could have edged lower for a third time in four months. Meanwhile, communication costs and other motor vehicle fees, repairs and leasing costs that dipped sharply in September, could have recovered last month. On the goods side, prices for new vehicles likely edged up in October, following a 0.1% decline in September. In the other direction, prices for used vehicles may have fallen for the eighth straight months. Apparel prices could have also declined, though at a slower pace than the 0.7% downtick recorded in September.”