US: Modest pick-up in core PCE inflation in January coming - Nomura

Analysts at Nomura explain that relevant elements from the January PPI and CPI inflation reports point to a modest pick-up in core PCE inflation in January.

Key Quotes

“Core CPI goods prices, most of which are inputs for the core PCE price index, were stronger than expected in January, up sharply by 0.4% m-o-m. Core CPI service prices were up 0.3% m-o-m, which is a trendlike pace.”

“As for the relevant components from the January PPI report, physician service prices increased relatively strongly by 0.2% m-o-m and airline fares jumped 4.8% m-o-m although hospital service prices did not increase strongly. Altogether, we expect the core PCE index to have increased strongly by 0.3% (0.315%) m-o-m (Consensus: 0.3% m-om). On a year-on-year basis, we forecast a 1.74% increase in the core PCE index (Consensus: 1.7% y-o-y).”