US CPI Preview: October Inflation Forecast at 3.9%

The US Bureau of Labor Statistics publishes October consumer price index (CPI) data tomorrow, at 13:30 UK time. CPI tracks the change in prices paid by consumers, and the release lands at 8:30am US Eastern. The headline annual rate is forecast to accelerate. The Federal Reserve, the US central bank, held its policy rate at 3.75% to 4.00% on the 28th of October.

What the last reading showed

Headline CPI rose 3.7% year on year in September, above the 3.6% forecast and up from 3.4% in August. The monthly rate was 0.6%, against 0.4% in August. Core CPI, which strips out food and energy prices, rose 2.6% on the year, ahead of a 2.5% forecast and up from 2.4% the month before. Core rose 0.3% on the month.

Over the past year the headline annual rate has ranged between 2.4% and 4.2%, the high coming in May.

What to expect

The forecasts put headline inflation at 3.9% year on year, up from 3.7%, but the monthly rate at 0.3%, down from 0.6%. For core, the forecasts are 2.8% on the year and 0.2% on the month.

Measure	Previous	Forecast	Actual
Headline, year on year	3.7%	3.9%	Pending
Headline, month on month	0.6%	0.3%	Pending
Core, year on year	2.6%	2.8%	Pending
Core, month on month	0.3%	0.2%	Pending

As general context rather than a forecast, a hotter print than these figures could push back hopes of Fed rate cuts. That could lift the dollar and US yields, which would affect sterling pairs and UK holdings with US exposure.

What to watch

• Headline annual rate against the 3.9% forecast and September’s 3.7%.
• Headline monthly rate against the 0.3% forecast, after 0.6% in September.
• Core annual rate against the 2.8% forecast and September’s 2.6%.