MNI US CPI Preview: Core Seen Softer On Used Cars Drag

EXECUTIVE SUMMARY

• Consensus puts core CPI inflation at 0.3% M/M in June as it slowed from a modest beat of 0.44% in May.
• It’s seen almost entirely coming from used car prices pulling back after two rapid 4.4% increases. Analysts look for declines of circa -1% although yesterday’s Manheim prices sliding -4.2% caught markets attention.
• Elsewhere, non-housing core services could have eased a touch (with the usual pitfalls vs its PCE equivalent) and we also watch non-used car core goods after its exactly unchanged May print.
• There is no evidence that the downside miss in nonfarm payroll gains last Friday has deterred FOMC participants from signalling their preference to raise rates twice more this year. An above-expected print and/or a report with strong details in ex-shelter services would reinforce the "higher for longer" theme; a miss most impactful for September pricing.

PLEASE FIND THE FULL REPORT HERE:

USCPIPrevJul2023.pdf