The August 2024 Consumer Price Index (CPI) rose 0.2% month-over-month (MoM) and 2.5% year-over-year (YoY), the smallest annual increase since February 2021.
There was an unexpected rise in core inflation in August that was driven by a strong increase in shelter and transport services prices, which we do not think will be sustained.
Regardless, the big picture is that this data represents something of a "draw" – it doesn't suggest a reacceleration of inflation, but it doesn't meaningfully progress the core disinflation narrative either.
In our strategists’ view, this report is a mixed bag for the Federal Reserve (Fed), but they do not believe it will sway the Fed from cutting rates next week. While this report highlights there are still pockets of strength in portions of CPI, overall, our strategists view the report as further progress on the way to the Fed’s 2% inflation target.
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