The August CPI report was mostly in line with economists’ expectationsi. He emphasizes it Jakob West Christensenmarket analyst at eToro, on the US inflation reading, explaining that overall inflation fell to 2.5%, from 2.9% the previous month, and represents the smallest increase in more than three and a half years.
Inflation: Convincing for the Fed
While we continue to see steady progress in moderating price increases, core inflation, which excludes food and energy volatility, rose 0.3% in the month versus a 0.2% forecast. However, for the current year, it remained flat at 3.2% and this one-off reading should not cause concern.
Today’s data “it is the last significant signal ahead of next week’s Fed meeting. Recall that the Fed has emphasized that its decision is based on a collection of data rather than a single point – with headline inflation falling for the fifth consecutive month, the data should provide the Fed with more than enough evidence. Especially given the recent weakness in the labor market, the data should give the Fed carte blanche to start cutting rates on September 18.”
Less for the stock market
While this report is good news for stock market bulls, “may not provide the equity the same relief we saw with previous “not so hot” readings. The inflation report has long been the most critical number for the market, but recently it has been overtaken by concerns about a cooling labor market and recession worries,” the expert concludes in the commentary.
