US headline CPI inflation probably dropped below zero in Jan: Capital Economics

Quotes from Capital Economics:

- Since gasoline prices fell by as much as 18% m/m last month, it is all but guaranteed that headline CPI inflation (13.30 GMT) dropped below zero in January. 

- We calculate that the CPI index fell by 0.8% m/m, with the annual inflation rate plummeting to -0.3%. Even so, we expect this drop into deflation to be brief, with inflation jumping back to the Fed's 2% target a year from now. 

- Despite airfares presumably falling further in response to lower fuel prices and the stronger dollar putting downward pressure on imported goods prices, we expect a modest increase in core consumer prices after two big consecutive monthly declines. We have pencilled in 0.1% m/m increase and 1.6% y/y increase accordingly.