By eFXdata — Jan 14 - 04:30 PM
Synopsis:
Goldman Sachs forecasts slightly higher-than-consensus CPI figures for December, with a 0.25% increase in core CPI and a 0.40% rise in headline CPI, driven by higher used car prices, seasonal airfare distortions, and a rebound in shelter costs. Year-over-year inflation is expected to decline in Q1 2025.
Key Points:
-
Core CPI Forecast:
- Expected to rise by 0.25% (consensus: 0.2%) and 3.27% year-over-year.
- Drivers include:
- Used car prices (+1.0%).
- Airfares (+1.0%) benefiting from seasonal distortions.
- Flat communications prices also impacted by seasonal factors.
- Shelter costs to rebound slightly (OER +0.30%, rent +0.25%).
-
Headline CPI Forecast:
- Predicted to increase by 0.40% (consensus: 0.3%) and 2.91% year-over-year.
- Key contributors:
- Food prices (+0.35%).
- Energy prices (+2.3%).
-
Core PCE Implication:
- December CPI data is consistent with a 0.18% increase in core PCE.
-
Q1 Outlook:
- Year-over-year inflation likely to decline in Q1 2025 due to a falling underlying trend and reduced start-of-the-year distortions.
Conclusion:
Goldman Sachs expects slightly higher-than-consensus CPI prints for December, with inflationary pressures concentrated in used cars, airfares, and shelter. However, the firm projects a moderation in inflation trends as Q1 unfolds.
Source:
Goldman Sachs Research/Market Commentary