Supercore CPI: October core non-housing service inflation is expected to come in at around the same general pace as in September, at 0.39% median/mean. But the dearth of estimates this month – just two at 0.35% and 0.43% - suggests two-sided risks. See chart.
- Outside of the considerations in our previous note on categories to watch (steady rents etc), medical services will be a key area of focus after September’s solid supercore figure – this category was driven by a spike in professional services which some analysts expect to reverse in October. Medical care rose 0.4% after declines in each of the prior 2 months, with physicians' services up 0.9%.
- Along the same lines, car insurance (+1.2%) came in well above expectations in September. Note that many of the categories in focus this month (eg airfares, auto insurance) for the most part won’t be translated into PCE, so their impact on the reaction to Supercore / core CPI readings as a whole could be mitigated.
Early PCE Estimates: Going into CPI (and to be refined by PPI on Thursday), analysts see core PCE coming in between 0.2-0.28% M/M in October, with a bias to a rounded 0.2% result. That said, the figure resembles the overall take on CPI, which is steady vs prior month (core PCE came in at 0.25% M/M in September). Some analyst expectations:
- Nomura: 0.274%
- Barclays: 0.26%
- Citi: 0.24%
- Goldman: 0.24%
- Deutsche: 0.21%
- Wrightson ICAP: 0.2%
