US Sep CPI: Headline prices likely to increase 0.5% overall - Westpac

Analysts at Westpac suggest that in September, hurricane season will see gasoline run higher again and headline prices are likely to increase 0.5% overall.

Key Quotes

“Inflation has been an ongoing disappointment in the US in 2017, with core and headline CPI inflation having fallen back below the 2.0%yr medium-term target as the PCE measure remained there.”

“However in August, headline prices rose 0.4% as gasoline prices jumped over 6% and rents also experienced a strong month. Annual headline inflation lifted from 1.7%yr to 1.9%yr.”

“Come September, hurricane season will see gasoline run higher again and headline prices increase 0.5% overall. Annual inflation is therefore set to bounce back above 2.0%.”

“These inflationary influences will prove transitory, so it is best to focus on core inflation. This measure is expected to print a more modest 0.2%, 1.7%yr. Further out, expect to see headline and core inflation settle a little below the 2.0%yr medium-term target of the FOMC.”