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Another month of cooling CPI suggests the 'transitory' narrative continues to win out, for now.

  • Re-opening categories with once-surging prices are now falling away: percentage point contributions to M/M CPI reading has airfares/public transport, used vehicles, car insurance, lodging away from home, and car and truck rental dragging the most on the August reading.
  • What's also notable though is that outside of the big pandemic areas, categories that might be associated with Delta consumer hesitancy showed a bit of cooling in August, including Food Away From Home.
  • On the margins, perhaps something to give policymakers pause when thinking about the strength of the reopening economic rebound in the face of COVID.
  • But the big drags were largely expected and the would-be 'stickier' categories including OER and Rents remain strong contributors, with few unusual outliers in other categories (apart perhaps from household furnishings which were one of the biggest contributors to August CPI after zero impact in July).

Source: BLS, MNI