- US core inflation slightly exceeded expectations
- Core services inflation accelerated
- The minor upside surprise rules at upsizing next week
- US CPI / core CPI, m/m % SA, August:
- Actual: 0.2 / 0.3
- Scotia: 0.2 / 0.2
- Consensus: 0.2 / 0.2
- Prior: 0.2 / 0.2
US core inflation picked up a touch last month and this finally rejects supersizing Fed cuts. There is no reason to supersize a cut next week versus sticking to the gradual mantra. Barring major developments, I can’t see a fifty move at all this year so pricing is too rich.
Core inflation was up by 0.28% m/m SA which rounds up to 0.3% on market screens. That was roughly a tick above just about everyone’s calls and while it doesn’t happen often, the Cleveland Fed’s nowcast was the raffle winner this time. The annualized rate was 3.4% m/m SAAR which is the highest since April (chart 1).
![Chart 1: US Core CPI Inflation Progress](/content/experience-fragments/scotiabank/global_economics/en/scotia_flash/september_2024/us-cpi--2024-09-11-/master/_jcr_content/root/image.img.png/1726065203946.png)
Expect core PCE to follow core CPI higher on September 27th (chart 2).
![Chart 2: US Core CPI & Core PCE](/content/experience-fragments/scotiabank/global_economics/en/scotia_flash/september_2024/us-cpi--2024-09-11-/master/_jcr_content/root/image_copy_899693248.img.png/1726065219370.png)
The culprit was a mild acceleration of core services prices. CPI services ex-housing and energy services was up by 0.33% m/m SA which is the firmest reading since April (chart 3). Services ex-energy services were up 0.4%.
![Chart 3: US CPI Core Services Ex-Housing](/content/experience-fragments/scotiabank/global_economics/en/scotia_flash/september_2024/us-cpi--2024-09-11-/master/_jcr_content/root/image_copy_902660971.img.png/1726065236084.png)
CPI goods ex-food and energy was weak again, down -0.2% m/m SA (chart 4).
![Chart 4: US Goods Inflation](/content/experience-fragments/scotiabank/global_economics/en/scotia_flash/september_2024/us-cpi--2024-09-11-/master/_jcr_content/root/image_copy_490176080.img.png/1726065257941.png)
A key driver remains shelter prices that were up by 0.5% m/m SA with rent of primary residence up by 0.5%, and owners’ equivalent rent up 0.5% (charts 5, 6).
![Chart 5: US Rent Inflation; Chart 6: Housing Inflation](/content/experience-fragments/scotiabank/global_economics/en/scotia_flash/september_2024/us-cpi--2024-09-11-/master/_jcr_content/root/image_copy_1541330585.img.png/1726065303393.png)
Airfare popped higher by +3.9% m/m against a trend of persistent declines over prior months (chart 7).
![Chart 7: US Airfare](/content/experience-fragments/scotiabank/global_economics/en/scotia_flash/september_2024/us-cpi--2024-09-11-/master/_jcr_content/root/image_copy_459904713.img.png/1726065317860.png)
Other categories offered little by way of surprises. Gas fell by -0.6% m/m SA. New vehicles prices were down by -0.3% m/m SA, with used vehicles down -1% m/m SA. Groceries ("food at home") were flat. Eating-out proxies ("food away from home" that also includes cafeterias etc) increased by +0.3% m/m SA, extending the string of similar gains.
See the accompanying charts and tables for more details.
![Chart 8: US CPI: Gasoline; Chart 9: US Food Prices; Chart 10: US Apparel: Chart 11: New vs Used Vehicle Inflation](/content/experience-fragments/scotiabank/global_economics/en/scotia_flash/september_2024/us-cpi--2024-09-11-/master/_jcr_content/root/image_copy_2063149269.img.png/1726065366724.png)
![Chart 12: US Motor Vehicle Insurance](/content/experience-fragments/scotiabank/global_economics/en/scotia_flash/september_2024/us-cpi--2024-09-11-/master/_jcr_content/root/image_copy_45741758.img.png/1726065381025.png)
![Chart 13: August Changes in US Headline CPI Categories; Chart 14: August Weighted Contributions to Monthly Change in US Headline CPI](/content/experience-fragments/scotiabank/global_economics/en/scotia_flash/september_2024/us-cpi--2024-09-11-/master/_jcr_content/root/image_1204278548.img.png/1726065420087.png)
![Chart 15: August 12-Month Changes in US Headline CPI Categories; Chart 16: August Weighted Contributions to the 12-Month Change in US Headline CPI](/content/experience-fragments/scotiabank/global_economics/en/scotia_flash/september_2024/us-cpi--2024-09-11-/master/_jcr_content/root/image_copy_2088578491.img.png/1726065464378.png)
![Table: US Inflation Component Breakdown](/content/experience-fragments/scotiabank/global_economics/en/scotia_flash/september_2024/us-cpi--2024-09-11-/master/_jcr_content/root/image_copy_copy_1583964804.img.png/1726061719634.png)
![Table: US Inflation Component Breakdown](/content/experience-fragments/scotiabank/global_economics/en/scotia_flash/september_2024/us-cpi--2024-09-11-/master/_jcr_content/root/image_copy_copy.img.png/1726061730032.png)
![Table: US Inflation Component Breakdown](/content/experience-fragments/scotiabank/global_economics/en/scotia_flash/september_2024/us-cpi--2024-09-11-/master/_jcr_content/root/image_copy.img.png/1726061740248.png)
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