US: March CPI declined 0.1% - Nomura

Analysts at Nomura note that US headline CPI declined by 0.1% (0.063%) m-o-m in March, slightly below the market consensus of a flat reading but more in line with Nomura’s forecast of -0.066%.

Key Quotes

“On a 12-month basis, headline CPI inflation jumped to 2.4% (2.360%) from 2.2% in the previous month (Nomura: 2.346%, Consensus: 2.4%). For non-core components, a 0.1% m-o-m increase in food prices was slightly weaker than we had expected. However, excluding food and energy, core CPI inflation rose by 0.2% (0.176%) m-o-m, exceeding our forecast of +0.134% by about 4bp. Core CPI components were somewhat mixed: medical care services and rent inflation rebounded after weakness in the previous month but a series of other service prices, such as internet information services, declined sharply during the month. There was significant noise on both the upside and downside.”

“Overall, there is little information to change our medium-term inflation outlook. Incorporating PPI and CPI data, we expect a 0.191% m-o-m increase in the core PCE price index in March, translating into 1.9% (1.95%) on a y-o-y basis, up from 1.60% in February. Largely due to positive base effects, we expect y-o-y core PCE inflation to reach 2.0% in the coming months but a more gradual acceleration thereafter.”