CANADA DATA: Cell Phone Inflation Drives Otherwise Soft Services CPI (2/3)
Nov-17 17:11
Underlying the steady core dynamics were a pickup in services prices alongside steady core goods prices - however the details were mixed beneath the surface.
- Overall, services prices saw a pickup to 3.2% Y/Y from 3.0% prior, for a 5-month high. Household operations (9% of the CPI basket, up 4.0% Y/Y after 3.1% prior for the highest reading in a decade) appeared to drive this increase, in turn by a 40+ year record rise in phone services driven by cellular prices (+7.7% for 1% of the basket). However, other categories were largely mixed.
- The most prevalent was shelter, which descended to a 2.5% Y/Y rate from 2.6% in the prior 2 months for a fresh post-March 2021 low. This came despite a pickup in rented accommodation inflation (5.1% after 4.7% for a 6-month high), with owned accommodation (2.0% after 2.1%) disinflating slightly as mortgage and homeowners replacement costs pulled back. The property tax CPI of 5.6% Y/Y (vs 6.0% in the prior 12 months) represented a disinflationary shift in this annual update but still an upside driver to overall CPI. Water, fuel and electricity saw a 0.5% Y/Y fall for a 4-month low, in large part due to the aforementioned drop in natural gas prices (-17.0% Y/Y).
- Elsewhere, transportation CPI was down to 0.7% Y/Y after 1.5%, offset in part by a pickup in recreation/education to a 7-month high 2.0% from 1.6%, while health and personal care was relatively steady at 2.5% (2.6% prior).
- Goods prices rose by 0.9% Y/Y, down from 1.6% prior, though it was notable that durable goods (2.3% after 2.2%) remained stubbornly strong even as we saw a sharp pullback in semidurables (0.2% after 0.9%) and nondurables (0.4% after 1.5%), which in part were due to softer food/energy prices.
- In sum, core goods prices were steady at 1.6% for a 2nd consecutive month.
- Highlighting the move lower in core: clothing and footwear prices saw a 0.3% Y/Y fall, after 4 consecutive positive months, while furniture and household equipment inflation fell to a 7-month low 0.3%.
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LOOK AHEAD: US Week Ahead Headlined By Delayed CPI Report On Friday
Oct-17 20:51
- The September US CPI report will be released on Friday, delayed amidst the government shutdown but with the BLS making a special exception on social security payment considerations.
- Bloomberg consensus looks for headline CPI inflation at a rounded 0.4% M/M after 0.38% back in August and for Y/Y inflation to firm two tenths to 3.1% for what would be its highest since May 2024.
- Core inflation is seen at a rounded 0.3% M/M after 0.35% in August (exceeding the median unrounded estimate of 0.31%) and 0.32% in July. It’s expected to see core CPI inflation hold at 3.1% Y/Y having in August increased to its highest since February.
- Core details should see focus on both goods and services angles: underlying goods inflation has clearly firmed in recent months on tariff pressures although the median increase has currently seen a peak back in June, whilst services will be watched for any spillover after some strong recent non-housing readings.
- The report will come within the FOMC blackout period ahead of the Oct 28-29 decision, with a 25bp cut fully priced and likely needing a large surprise to alter this.
- As for broader inflation details, Fed Chair Powell this week confusingly suggested that we will have the September PPI report but the BLS had previously said “No other releases will be rescheduled or produced until the resumption of regular government services”.
US DATA: Latest Jobless Claims Estimates During The Shutdown
Oct-17 20:30
As noted earlier, MNI estimates initial jobless claims at a seasonally adjusted 218k in the week to Oct 11 and continuing claims at a seasonally adjusted 1929k in the week to Oct 4.
- To give a better idea of sensitivity around these estimates, which rely on estimates for some missing states, we note the below analyst estimates:
- Goldman Sachs have a central estimate of 217k for initial claims in a range of 211-225k, whilst they see continuing claims at 1917k in a range of 1885-1930k.
- JPMorgan meanwhile also see 217k for initial claims whilst they see continuing claims as having held constant at 1927k.
NATGAS: Venture Global in Talks with Ukraine for more LNG Deliveries, Reuters
Oct-17 20:28
Ukraine is seeking more cargoes from Venture’s Plaquemines facility as the embattled nation approaches the winter heating season, according to Reuters sources
- Venture is in talks with Ukraine’s DTEK to procure more LNG cargoes after a year of gas infrastructure attacks by the Russians.
- Venture Global CEO Michael Sabel met with President Volodymyr Zelenskiy on Thursday October 16.
- DTEK signed an agreement in 2024 for an undisclosed amount of LNG from the facility, as well as 2 mtpa from Calcasieu Pass Phase 2 currently under construction.
- Plaquemines currently has spare capacity to deliver more cargoes to Ukraine on the spot market, per Reuters.
- Plaquemines now sends out the second highest LNG volume in the US, with feedgas demand averaging 3.45 bcf/d according to MNI figures.
