Energy price drag assumptions leave US CPI profile revised down

US CPI forecasts have been revised last month, since then the gasoline futures prices for delivery through September 2016 moved higher, while long-term futures prices dropped slightly.

The crude oil futures prices, natural gas and heating oil broadly dropped. Mainly the spread between futures prices and retail spot prices for gasoline was reduced back near its long-term historical average more quickly than was anticipated.

Hence, the constant spread seems to be consistent with the long-term historical average. The impact of higher gasoline futures prices in the forecast are outweighed by the change in assumed spread over the first few months of the forecast horizon, combined with lower futures prices for other energy goods.

"We expect energy prices to be a drag on m/m headline inflation through March 2016...Thereafter, we forecast modest increases bringing the y/y rate of core CPI to 1.7% by the end of 2016. For the November CPI, we forecast a 0.0% m/m (sa) reading for headline and a 0.2% m/m (sa) increase in core consumer prices.", says Barclays in a research note.