This article is about what are the CPI forecasts produced by the FED. The inflation rate depends on the balance between aggregate supply and aggregate demand within the economy. Labor market conditions and inflation expectations are the major demand side forces: a decrease in the unemployment rate means the number of employees increases, which, in turn, increases demand and inflation. There are a lot of forecasts for the next CPI report.
What are the CPI Forecasts Produced by the FED?
The inflation forecasts from February 2023 until the end of 2024 produced by the Federal Planning Bureau are based on observations until January 2023 from Statbel. These forecasts take into account the futures quotes of 25 January 2023. in 2023 and 80 dollars per barrel in 2024. The exchange rate of the euro should be 1.10 dollar per euro in 2023 and 1.12 dollar per euro in 2024.
These forecasts do not yet take into account the measures with respect to the energy bill reform announced by the federal government on 6 February, and thus assume that the VAT rate on natural gas and electricity will be 21% from April 2023 onwards.
On the basis of these monthly inflation forecasts, average consumer price inflation should be 4.8% in 2023 and 2.9% in 2024. compared to 9.59% in 2022 and 2.44% in 2021. The average growth rate of the so-called 'health price index ', which is used for the price index of wages, social benefits and house-rent, should be 5.2% in 2023 and 3.2% in 2024. compared to 9.25% in 2022 and 2.01% in 2021.
In November 2022. the pivotal index for social benefits and public sector wages was last reached. According to our monthly forecasts for the 'health price index', the three following pivotal indices should also be exceeded in 2023 and 2024.
- Pivotal index 125.60 should next be reached by the smoothed health index in June 2023. As a result, social benefits should be adjusted (by 2%) to the higher cost of living in July 2023 and public sector wages should follow suit 202 in August .
- The next pivotal index (128.11) should be reached in January 2024. As a result, social benefits should be adjusted (by 2%) to the higher cost of living in February 2024 and public sector wages should follow suit in March 2024.
- The subsequent pivotal index (130.67) should be reached in November 2024. As a result, social benefits should be adjusted (by 2%) to the higher cost of living in December 2024 and public sector wages should follow suit in January 202
Inflation Rate Expectations
- According to the survey of economists by FocusEconomics, CPI inflation is expected to average 8.0% in 2022.
- According to the US Bureau of Labor Statistics (BLS), in September 2022 the US unemployment rate is 3.5%, which is 1.2 percentage points lower than a year before.
- One-year inflation expectations decreased to 5.4% in September 2022 in the New York Fed's Survey of Consumer Expectations compared to 6.8% in June 2022.
- US GDP, representing the country's aggregate demand, increased at an annual rate of 2.6% in the third quarter of 2022. according to the US Bureau of Economic Analysis (BEA).
- Current US CPI inflation, which is released monthly by the US BLS, averaged 8.2% in September 2022. The US PCE inflation rate released by BEA for Q3 2022 was 4.2% on average.
This article is about the inflation rate expectations and what are the CPI forecasts produced by the FED.
