US: INFLATION LIKELY COOLED OFF MODESTLY BUT STILL RISING AT A STRONG PACE IN MARCH – TDS

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The most important economic report of the week will be the US Consumer Price Index on Wednesday. Analysts at TD Securities expect the index to rise by 0.1% in March, and the core by 0.4%. They see the CPI slowing to 3.6% by the fourth quarter.

Key quotes:

“Our estimates for the CPI report are likely to show that core price inflation cooled off modestly to a still strong m/m pace in March: We forecast inflation to print 0.1%/0.4% m/m for headline/core CPI, respectively. Importantly, we expect the report to confirm that core goods prices have shifted from subtracting from inflation to adding decidedly to it.”

“We continue to expect core inflation to settle around a still uncomfortable 0.4% m/m pace through Q2 2023.”

“We look for headline CPI to slow to 3.6% y/y in 23Q4, after closing 2022 at a booming 7.1% y/y pace. For core CPI, we also project deceleration to 3.8% y/y in 23Q4 from 6.0% in 22Q4. Finally, for the core PCE index, we forecast inflation of 3.6% y/y in 23Q4 after 4.8% y/y in 22Q4.”


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