US CPI Preview: December 2023

While headline inflation is set to bounce in December on account of base effects, the core CPI is expected to record a ninth consecutive month of decelerating YoY growth.

Headline CPI expected to rise on the back of base effects

With a very large MoM decline in gasoline prices falling out of the YoY calculation in December, I expect headline CPI growth to rise from 3.1% to 3.3% (3.27% to two decimal places). This compares to a consensus forecast of 3.2%.

Core CPI expected to mark a disinflationary milestone

With the core CPI not impacted by gasoline price base effects, I expect it to record a ninth consecutive month of disinflation. This is expected to result in annual core CPI growth falling below 4% YoY, marking another milestone in the disinflationary process.

I expect core CPI growth to fall to 3.9% YoY, but on a two decimal place basis, I expect the core CPI to fall to 3.85%, which highlights the potential for the core CPI to also fall to a rounded 3.8% in December.

This compares to a consensus forecast of 3.8%.