urbazon/E+ via Getty Images
The highly-anticipated Consumer Price Inflation report is due Tuesday morning, with economists widely expecting retail inflation in November to be unchanged again from the prior month.
On a year-over-year basis, CPI is forecast to have risen 3.1%, slowing from last year’s 3.2%. Core CPI, which excludes food and energy, likely rose 0.3% sequentially and 4.0% Y/Y.
“The upcoming CPI report may show zero inflation or even deflation, influenced by global energy prices and supply glut,” said Investing Group Leader Chris Lau.
“Few expect any significant change in inflation. That leaves the market paying close attention to Federal Reserve Chair Jerome Powell’s post-meeting commentary hawkish tone,” he added.
Inflation has been steadily declining, with retail inflation unchanged in October, while core PCE – the Fed’s preferred inflation gauge – reached this year’s lowest level.
However, the Fed has been wary of declaring victory in its fight to rein in inflation. As the Fed’s meeting kicks off later in the day, every bit of data counts.
The Fed is expected to maintain its federal funds target range at 5.25%-5.5% for the third time in a row. Powell previously warned that the Fed would raise rates further if deemed necessary.
“Unless CPI is much worse than expected, we do not expected financial conditions to change much,” said Dennis DeBusschere, president, 22V Research. “They are unlikely to ease, but a sharp tightening should not be expected.”
