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US CPI preview: Prices likely to rise 0.3% in January - Westpac

Analysts at Westpac provide a brief preview of the January inflation report from the US economy, slated for release on Wednesday.

Key Points:

US headline inflation has steadily accelerated in recent months as the previously deflationary influence of energy prices once again became a positive contributor to aggregate price growth.

Annual headline inflation has now risen from a recent low of 0%yr at September 2015 to 2.1%yr in December. As a result, it has now come back into line with the core measure, which has remained a little above the FOMC's medium-term 2.0%yr target over the past twelve months.

Apart from energy, key to the strength of inflation currently are rents; health costs; and higher minimum wage rates which have been priced into the price of goods and services to limit the impact on profit margins.

Headline prices are likely to rise 0.3% in January, with core inflation a little more modest at 0.2%. In coming months, headline and core inflation will settle near the 2.0%yr figure.

AG Markets Review

Monday, 13 Feb, 2017 / 5:02

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