Today's U.S January CPI report revealed a slightly weaker than expected flat headline
Today's U.S January CPI report revealed a slightly weaker than expected flat headline reading (rounded from -0.020%) and a firm 0.2% (0.240%) core consumer price rise. The y/y increase of 1.6% in headline prices eased further from 1.9% in December. The 2.2% core reading matched the December and November gain. Core gains continue to firm, averaging 0.218% over the last three months, versus a lower 0.182% over the past six months. Analysts expect a 0.1% February CPI reading for the headline and a 0.2% rise in the core with a -0.1% energy reading that should leave a 1.5% y/y headline rise and a core gain of 2.2% y/y. The Q4 oil price drop has left a weakening pattern for goods prices that has depressed the inflation metrics, alongside a pull-back in headline y/y inflation due to easy comparisons. For the PCE chain price figures, analysts expect a -0.1% December headline figure with a 0.2% core price gain, followed by a flat January figure with a 0.2% core price gain, leaving a mix that matches the CPI figures on both cases. Analysts expect a drop-back in y/y headline gains to 1.6% in December and 1.3% in January, from 1.8% in November. The core y/y price gain should remain at November's 1.9% in both December and January, versus 1.8% in October. Both y/y measures lie below the Fed's 2% inflation objective.