• The US Consumer Price Index is set to rise 3% YoY in January, down from December’s 3.4% increase.
• Annual Core CPI inflation is expected to edge lower to 3.8% in January.
• The inflation report could impact the US Dollar by providing clues as to the timing of Fed policy pivot.

The high-impact US Consumer Price Index (CPI) inflation data for January will be published by the Bureau of Labor Statistics (BLS) on Tuesday at 13:30 GMT. Inflation data could alter the market’s pricing of the Federal Reserve (Fed) policy pivot, fuelling extreme volatility around the US Dollar (USD).

What to expect in the next CPI data report?

Inflation in the United States (US) is forecast to rise at an annual pace of 3% in January, a tad softer than the 3.4% increase reported in December. The Core CPI inflation rate, which excludes volatile food and energy prices, is forecast to tick down to 3.8% from 3.9% in the same period.

The monthly CPI and the Core CPI are seen increasing 0.2% and 0.3%, respectively.

The BLS announced on Friday that it revised the monthly Consumer Price Index (CPI) increase for December lower to 0.2% from 0.3%. The Core CPI was unrevised at 0.3% for the same period. On the other hand, November's CPI increase was revised higher to 0.2% from 0.1%, while October's 0.1% growth was left unchanged. The BLS noted that CPI revisions reflect the new seasonal adjustment factors.

In January, Oil prices rose more than 6% on growing concerns over a supply shock due to the ongoing crisis in the Red Sea. Meanwhile, Manheim Used Vehicle Index was unchanged in the same period. Previewing the inflation report, “We look for core inflation to stay relatively unchanged at 0.3% m/m in January, with the headline likely slowing a tenth to 0.1%,” said analysts at TD Securities. “Our unrounded core CPI forecast at 0.27% m/m suggests it will be a close call between a 0.2% and a 0.3% gain. The report is likely to show that used vehicle prices were a large drag on inflation, while OER/rents are expected to move sideways.”