11 charts on US CPI: Hotter headline and weaker core? An odd steepener cocktail
Happy Monday and welcome to our 11 charts on US CPI.
US inflation will prove to be a mixed bag of goods in the coming months. Base effects in headline will be tough to beat, while core inflation is much more likely to dwindle in yearly terms over the next 2-3 months.
US headline CPI will jump to 3.3% on a 0.2% MoM trajectory, which makes a headline increase in the yearly CPI almost inevitable at this juncture. Even if this is partially driven by base effects, it tends to have an impact on markets and Fed decision-making anyway.
We see risks tilted a tad to the upside for headline inflation, while core inflation risks are more mixed. The Fed is also much more likely than the ECB to deliver a hike in September consequently.
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Chart 1: US CPI with various MoM scenarios
Here is our chart-deck on the US CPI report on Thursday. A soft core paired with a hotter headline? It looks like an odd- and rare steepener cocktail to us.
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