US inflation in December likely to have rebounded sharply – Morgan Stanley

Morgan Stanley forecasts headline inflation to come in at 0.37% m/m and 2.7% y/y as we look to the US December CPI report later today. The former is a little hotter than the 0.3% expected estimate with headline annual inflation matching estimates and the November reading at 2.7%.

As for core inflation though, the firm forecasts that at 0.36% m/m and 2.8% y/y. That is up from the 0.08% m/m average across the past two months as well as the 2.6% y/y reading in November.

On the more bullish estimates, they cite a later survey date in November and higher inflation in bimonthly-sampled cities as being two key reasons. By their calculations, it should add around 11 bps to core inflation for the month of December.

Overall, Morgan Stanley expects the report to indicate a clear rebound in price pressures after the recent soft patch and that could potentially rebuff the narrative that disinflation has paused rather than resumed.

This article was written by Justin Low at investinglive.com.