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23 Jan 2015
US core inflation may bottom in H1 15 before moving higher – Danske
FXStreet (Barcelona) - Signe Roed-Frederiksen of Danske Bank, anticipates US core inflation to bottom in May/June at 1.3% y/y before moving higher in the second half of the year to end 2015 at 1.7%, expecting Core PCE to follow the same path and end 2015 at 1.6%y/y.
Key Quotes
“Our current oil price forecast foresees a moderate increase in WTI oil to USD58 per barrel over the coming six months, followed by a recovery to USD82 per barrel by mid next year. Our oil price scenario translates into a bust-boom profile for the energy component in the CPI. On average, the energy component will drag headline inflation down by 1.7 %-point in each of the coming eight months, before turning into a major positive contributor to inflation in the beginning of next year.”
“Core inflation is set to bottom in May/June at 1.3% y/y before moving higher in the second half of the year ending the year at 1.7%. We expect the Fed’s preferred inflation measure, the core PCE, to follow the same path but to dip to 1.2% y/y by late spring before recovering towards 1.6% by year-end.”
“Headline CPI should bottom at -0.5%y/y in June before moving gradually higher along with the recovery in energy prices and should move above 2% early next year. The risk to the forecast given the current level of the WTI oil price is that headline inflation could drop even deeper into negative territory in the short term.”
“Headline PCE is set to print negative annual growth rates early this year as well, before moving back towards 1.5% by year-end.”
Key Quotes
“Our current oil price forecast foresees a moderate increase in WTI oil to USD58 per barrel over the coming six months, followed by a recovery to USD82 per barrel by mid next year. Our oil price scenario translates into a bust-boom profile for the energy component in the CPI. On average, the energy component will drag headline inflation down by 1.7 %-point in each of the coming eight months, before turning into a major positive contributor to inflation in the beginning of next year.”
“Core inflation is set to bottom in May/June at 1.3% y/y before moving higher in the second half of the year ending the year at 1.7%. We expect the Fed’s preferred inflation measure, the core PCE, to follow the same path but to dip to 1.2% y/y by late spring before recovering towards 1.6% by year-end.”
“Headline CPI should bottom at -0.5%y/y in June before moving gradually higher along with the recovery in energy prices and should move above 2% early next year. The risk to the forecast given the current level of the WTI oil price is that headline inflation could drop even deeper into negative territory in the short term.”
“Headline PCE is set to print negative annual growth rates early this year as well, before moving back towards 1.5% by year-end.”