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Aug 08 - 06:55 PM

TD: Expectations for US CPI Print on Thursday, Focus on Core-Price Inflation and Goods Inflation

By eFXdata  —  Aug 08 - 03:00 PM

TD Bank provides its forecasts for the upcoming US Consumer Price Index (CPI) data for July, emphasizing core-price inflation and the influence of goods inflation. Here are the essential details:

July Core-Price Inflation: TD expects core-price inflation to remain consistent with June, marking a second consecutive 0.2% month-over-month (m/m) gain (or 0.23% unrounded).

Goods Inflation: The bank identifies goods inflation as a likely significant factor pulling figures down. However, the impact of goods inflation may be somewhat balanced by other factors.

Shelter Prices: TD anticipates a modest acceleration in shelter prices, though it labels them as a key wildcard in the equation, indicating uncertainty.

Rising Gas Prices: TD acknowledges that increasing gas prices will help to maintain headline inflation at steady levels.

Total/Core Prices Forecast: The m/m forecasts from TD translate to 3.3% year-over-year (y/y) for total prices and 4.8% y/y for core prices.

Key Points:

  1. TD's expectations for July core-price inflation are consistent with the previous month, at a 0.2% m/m gain.
  2. Goods inflation could be a significant downside factor, but this may be balanced by shelter prices and rising gas prices.
  3. The bank's y/y forecasts are 3.3% for total prices and 4.8% for core prices, implying a steadiness in inflation dynamics.

Conclusion: TD's analysis for the US CPI print on Thursday highlights the complexities involved in inflation trends, with various factors like goods inflation, shelter prices, and gas prices playing a role. The bank's expectations align with the notion of stable inflation in the near term, and their analysis provides a well-rounded view of the different elements influencing price changes. These insights add to the understanding of inflationary pressures and underscore the need to monitor multiple economic variables in interpreting inflation data.

TD Bank Research/Market Commentary


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