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US DATA: CPI: Another Report Reducing Odds Of A 50bp Cut Next Week [1/2]

US DATA
  • Core CPI was easily stronger than expected in August at 0.28% M/M (cons 0.20%) after 0.165% in July and a particularly soft 0.06% in June.
  • One area that is odd is that the core M/M beat expectations but the Y/Y was much closer at 3.20% Y/Y. There are differences in the Bbg surveys (65 for M/M vs 51 for Y/Y) but we saw similar expectations in our survey which included unrounded estimates. It could suggest some seasonal adjustment quirks were at play.
  • Core services were out and out stronger than expected, with OER at 0.50% M/M (analyst av 0.30) on widespread regional strength and primary rents at 0.37% M/M (analyst av 0.30) whilst ex-housing core increased 0.33% M/M (limited analyst av 0.25, range 0.20-0.35) after 0.21%.
  • On rental inflation, we noted in the preview that June has been the only month in recent years with weighted rental inflation back at the 0.27% M/M averaged pre-pandemic. July saw an acceleration to 0.39% M/M before a further increase to 0.47% M/M in today’s data.
  • The impact from “supercore” inflation coming in at the high end of expectations was limited by some potentially softer implications for core PCE, conditional on tomorrow’s PPI report.
  • Core goods offered the most dovish aspect of the report, with used cars falling roughly as expected (-1.0% M/M after -2.3% with potential increases ahead) but ex-used cars seeing another -0.1% M/M decline despite higher input costs amidst a relative tightening in supply chain pressures. 

 

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