Barclays says that they expect core CPI to tick higher in November by 0.3%, “with the firming in the core services component only partly
offset by modest deflation in goods”. Adding that last month’s report likely “exaggerated” disinflationary pressures, as they see a reacceleration in core services inflation. That adds to an estimated increase in their CPI-equivalent of the PCE supercore measure to 0.39% on the month, up from 0.25% previously.
As such, the firm says that the average pace in core prices through June to November would tick higher to 2.9% annualised, up from 2.8% from June to October. And that makes it “more likely that the tightening bias in the FOMC statement will be
maintained”.
Meanwhile, Wells Fargo also notes that:
“Some payback after volatile travel-related declines in October will be responsible for some of the rise in
core inflation. But other areas should decelerate further, including primary shelter and goods prices, which
look set to decline for the sixth-straight month. While inflation pressure continues to subside, there is still
ground to cover before declaring victory.”
They argue that the CPI report today should not materially change the outcome of the Fed meeting this week, where the central bank is much expected to keep rates unchanged. That is even in the scenario that there is an upside surprise to the data, which could spur higher yields in the reaction.