U.S. consumer price inflation likely accelerated in November, core inflation to have remained subdued

U.S. headline consumer price inflation is likely to have accelerated again in November, whereas the core inflation is expected to have subdued again. In October, core inflation rose 0.149 percent, slightly weaker than projected and it might have again risen weakly by 0.136 percent in November, noted Societe Generale in a research report.

The cyclical components show slightly negative seasonality in November, and this year they are expected to be a drag again. Hotel rates, apparel and used car prices all appear set to drop. Apparel prices, especially, are a wild card. They have dropped in three of last four November reports, averaging a decline of -0.18 percent. But discounting during the holidays time could be a drag on the index that recorded a sharp 0.56 percent fall in November 2014.

Meanwhile, medical care prices are expected to have grown 0.2 percent after a flat figure in October, with certain rebound in services costs. Education costs are expected to have grown 0.3 percent, helped by a generous seasonal factor, while communication costs might have fallen 0.1 percent.

On the other hand, gasoline prices appear to have fallen 3 percent in November on an NSA basis; however, it is expected to have increased by around 1.9 percent on a seasonally adjusted basis. In all, the energy index is expected to have recorded a drop of 2 percent on a non-seasonally adjusted basis or a 0.8 percent decline on a seasonally adjusted basis. Prices of food might have dropped 0.1 percent, according to Societe Generale.

“Overall, the headline CPI may have advanced by 0.2 percent SA, which would push the yoy rate a tenth higher to 1.7 percent. Meanwhile, a reading in line with our core estimate would result in the core rate holding steady at 2.1 percent”, added Societe Generale.