US January CPI: Disinflationary impulse to persist – TDS

By FXStreet Research Team at TDS, suggests that the disinflationary forces dampening US consumer prices should continue to linger in January, as weaker energy and food prices push the headline CPI down a further 0.1% m/m (down 0.128% m/m at 3 decimal places), marking the second monthly decline in this indicator.

Key Quotes

“The expected 5.9% drop in gasoline prices should be the principal driver for the weak headline performance, while food prices should post a modest 0.1% m/m drop (marking the third consecutive drop in this indicator). On a year ago basis, however, favorable base effects should push the annual inflation index up to 1.2% y/y from 0.7% y/y in December.

Core inflation momentum should also be weak, as the index ekes out another sub-par 0.1% m/m gain (up 0.119% m/m at 3 decimal places). As a result, the pace of core inflation should slip modestly, falling to 2.0% y/y from 2.1% y/y the month before as base effects become less favorable.

The subdued core CPI performance will be on account of the continued fallout from the strong dollar on core goods costs and some modest slowing in core service costs inflation. The outlook for inflation remains quite weak, as the disinflationary …read more

Source:: FX Street