US CPI likely remained unchanged in January

January US consumer price index (CPI) is expected to have been flat on expected drops in retail energy costs and rise in other goods and services costs. In December, the CPI had dropped 0.1%. In contrast to the forecast of government statisticians for a seasonal rise of 0.3%, gasoline pump prices for all formulations and grades actually fell throughout the country by 4.1% to a seven-year low in the reference period.

With the likely declines in the costs of electricity, residential natural gas and home heating, the 4.6% decline in motor fuel prices likely cut the CPI energy measure by 2.6%, subtracting nearly 0.2 percentage points from the headline measure in January.

Meanwhile, consumer food prices likely increased only 0.1% in January after falling 0.4% in the November-December span. The core CPI, excluding projected movements in energy and food components, is expected to have risen by 0.2%, equivalent to the average rise in the final four months of 2015. The expected rise in core CPI in January is likely to have been contributed by a rise in shelter and medical care services costs and recovery in new vehicle and apparel prices.

"Reflecting a significant lift from base effects discussed in last month's edition, the year-to-year growth rate of the overall CPI nearly doubled to a 14-month high of 1.3%. The 12-month rise of the core subindex, meanwhile, is expected to remain at 2.1%", says Societe Generale.