Notes From the Desk – US CPI – The Devil is in the Details
Surging energy prices pushed the headline September CPI a touch higher than expected. While media outlets will flash the headline number, the devil is in the details, and that is what the Federal Reserve will be paying attention to.
- YoY headline CPI 3.7% (3.6% expected)
- YoY core CPI came in at 4.1%, as expected
- Goods prices continue to fall, led by a 2.5% decline in used car prices. Stripping out used cars, core goods prices fell 0.1%
- Service prices continue to be sticky as they accelerated from 0.37% MoM to 0.57% MoM in September.
- On a three-month annualized basis, core service prices have risen 5.4%
The path to 2% inflation is a bumpy one. Today’s data does little to settle the debate about whether the Federal Reserve hikes again this year; however, it does weaken the case for rate cuts in 2024.
Bond yields are rising slightly, with short-end rates moving more than long-end rates. A move higher is tempered by the flight to safety sparked by the situation evolving in Israel.