US December CPI: Disinflationary impulse re-emerging – TDS

By FXStreet FXStreet (Delhi) – Research Team at TDS, suggests that the disinflationary impulses tempering US consumer prices are expected to continue building in December, and TD expects the drop in gasoline prices to keep the headline index unchanged.

Key Quotes

“This will mark the second consecutive flat print on this indicator, and it reflects the fallout on domestic prices from the recent leg lower in global energy prices and the lagged impact from the Q4 run-up in the dollar. Food prices, however, should rise a modest 0.2% m/m pace, providing a partial offset to the 1.3% m/m drop in energy prices. Despite the flat print in December, favorable base effects should result in the pace of annual CPI inflation accelerating modestly to 0.8% y/y from 0.4% y/y in November.

TD sees core CPI growing a paltry 0.1% m/m but 2.1% y/y (consensus: 0.2% m/m; 2.1% y/y). TD is below consensus on housing starts for December and looks for a drop in the pace of construction to 1115k, versus the market at 1200k. We also expect the number of permits to fall (TD: 1178k, market: 1200k).”
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Source:: FX Street