TD: CPI Still High, Including Rents

TD saw the details of the September CPI report as "relatively strong", as "the strength in rents offset some weakening in the travel-related parts that have led this year's surge."

• They characterize the renewed strength in rent prices as "potentially more trend-setting than the swings in travel-related prices", though "expect upward pressure on rents to fade as the boost to the economy generally from reopening fades".
• They saw travel items on the weak side, with data "likely held down by fallout from the Delta wave, which now appears to be subsiding", though household furnishings and new vehicles were relatively strong.
• They "continue to expect significant slowing in the year ahead, with used vehicle prices in particular likely to swing to a minus from a plus."
• "That said, the momentum in rents suggests some further upside risk to our forecast for the core CPI to be up just 2.3% in 2022 (Q4/Q4)—and to our 2.0% Q4/Q4 forecast for core PCE prices."