US CPI Preview: Forecasts from nine major banks, annual inflation to decline slightly in July

Inflation in the United States, as measured by the Consumer Price Index (CPI), is expected to edge lower to 5.3% on a yearly basis in July from the 13-year-high registered at 5.4% in June. The annual Core CPI, which excludes volatile food and energy prices, is forecast to retreat to 4.3% from 4.5%. 

Here you can find the forecasts of economists and researchers of nine major banks, regarding the upcoming US inflation data due for release on Wednesday at 12:30 GMT.

Unless the CPI reading is a big negative surprise, the USD is likely to continue to outperform its rivals, according to FXStreet’s Eren Sengezer.

Nordea

“A monthly increase of 0.7% in the core index. Expect July to reach levels of 4.8% in the core index, driven by local supply shortage from the motor vehicle industry, airline fares and accommodation, all industries to reach extreme temperatures for yet another month. Elevated price levels on fuel oil and energy push headline inflation close to 5.6% in July.”

TDS

“The CPI probably rose strongly again, albeit not nearly as strongly as in recent months. We forecast up 0.5%/0.4% total/core on an MoM basis, following 0.9%/0.9% in June, 0.6%/0.7% in May and 0.8%/0.9% in April. Our forecast implies YoY readings of 5.3%/4.3% for total/core prices, down slightly from 5.4%/4.5% in June. We expect more slowing in coming months as airfares and lodging slow and vehicle prices reverse some of their earlier surge.”

RBC Economics

“We expect US CPI report to show the inflation rate held steady at 5.4% in July. To date, much of that increase can be attributed to ‘base effects’ and supply constraints that have sent used vehicle prices soaring. As businesses iron out supply chain bottlenecks, we continue to expect that price pressures will recede over the coming months. Central bankers will continue to look through transitory price jumps and keep a close eye on underlying broad-based price growth.”

ING

“If indeed markets are now feeling more comfortable with the Fed’s rate expectations priced into the dollar, then the main highlight of the week – US CPI data for July – may not have a strong FX impact, even if headline inflation inches higher (we expect it to flatten up at 5.4%).”

NBF

“We expect the core index to have gained 0.4% MoM. Despite the monthly progression, the annual core inflation rate could still fall two ticks to 4.3%, the result of a strongly negative base effect. Headline prices, for their pairt, could have risen 0.5% MoM, helped by an increase in seasonality-adjusted gasoline prices. This gain would translate into a one-tick decline of the annual rate to 5.3%.”

CIBC

“Used car prices look to have eased off slightly in July as supply side issues started to fade. That suggests a deceleration in the monthly rate of inflation, as used cars had been a major contributor to the rapid pace of overall price increases seen since the reopening. Still, with the labor shortage resulting in upwards wage pressures amidst surging demand for services, and energy prices continuing to climb, both total and core monthly prices likely rose by 0.4% in July. That would leave the annual rates of inflation slightly lower at 5.3% and 4.3% for total and core prices, respectively.”

BMO

“Expect little relief from recent steamy readings, as we look for the headline tally to bump up even a bit more to around 5.5%, with all of the supply pressures still firmly in force.”

ANZ

“We expect US core inflation to have risen by 0.5% MoM (4.5% YoY) in July, with headline increasing by 0.6% MoM (5.4% YoY). Federal Reserve core members are likely to stick with the view that the current intense inflation pressure is transitory.”

Deutsche Bank

“We are expecting a +0.5% MoM increase in headline CPI and a tick down to 5.3% YoY, after last month came in at +0.9% MoM, which took the YoY reading to +5.4%. We expect a +0.4% MoM and +4.3% YoY core print after June was +0.9% MoM and +4.5% YoY. This follows three straight months of higher-than-expected headline price increases, +0.9% (+0.5% expected) in June, +0.6% (+0.5% expected) in May, and +0.8% (+0.2% expected) in April.”