Tracking estimates for core PCE inflation in September remain reasonably wide but don't warrant pausing on their own
Executive Summary
- Core CPI inflation again surprised higher in September at 0.31% M/M (analysts were on cusp of rounding to 0.2 or 0.3) after 0.28% M/M in August.
- Supercore CPI was stronger than any estimate we’d seen beforehand but importantly was driven by CPI-specific factors that don’t translate to core PCE.
- Main rental inflation metrics were right at the soft end of analyst expectations as they pulled back from a particularly strong August, although it’s notable that they remain above pre-pandemic rates.
- PPI inflation followed a day later with softer than expected September M/M rates offset by upward revisions. PCE-relevant details firmed a touch though, and from an upward revised Aug as well.
- The CPI and PPI reports have left core PCE tracking at circa 0.25% M/M although the range of estimates from 0.21-0.28% M/M remains relatively wide considering the inputs now to hand.
- Atlanta Fed’s Bostic has talked on his openness to skipping a cut with the November meeting, which as he mentioned is consistent with his dot implying only one more cut this year.
- However, the CPI and PPI reports, combined with a sharp increase in jobless claims, haven’t been strong enough to extend the post-payrolls shift to more seriously pricing a skip, with 22.5bp of cuts priced for Nov.
- Ahead, Governor Waller’s speech on the economic outlook at 1500ET (Mon, Oct 14) is keenly watched.
PLEASE FIND THE FULL REPORT HERE: USInflationInsightOct2024.pdf
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