US CPI estimates for February: 1) The median of the current Bloomberg survey is 0.4% for total CPI and 0.4% for core CPI. I estimate that total CPI and core CPI are 0.39% and 0.35% respectively, which means that our estimates are very neutral compared with the market consensus. 2) The main upside risk is used car prices. The Manheim Used Car Price Index and Black Book Used Car Price Index, which we are concerned about, have both risen recently.
(The former leads the CPI used car price by about 2 months, while the latter leads by about 1 month. The latter has a higher correlation coefficient with the CPI used car price); 3) What determines the recent trend of CPI is not the car price, but energy price and rent. Energy price is easy to predict and has high certainty. For rent: we expect rent to slow down month-on-month. The rent of shelter in January was 0.8% month-on-month. We expect rent to drop to 0.7% month-on-month in February.
Under this month-on-month estimate, the total CPI will fall from 6.4% in January to 6.0% year-on-year, and the core CPI will fall from 5.6% to 5.4% year-on-year.
4) The growth rate of core services, excluding rent, has slowed down in the past few months and is expected to maintain this growth rate. The judgment on this item is neutral. Taking into account the final rounding, the above estimate is about 6bp away from 0.45%. Finally, it is appropriate to give a total CPI of 0.4% month-on-month, which corresponds to a core CPI of about 0.35% month-on-month.