Author Topic: Forex News Feed - US CPI: Soft headline, but core inflation is extension - Wells  (Read 152 times)

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Consumer price inflation rose more slowly in October due to a pullback in life prices, but core inflation picked taking place, explained analysts from Wells Fargo.  According to them reflation increasingly looks to be minister to happening for track which will preserve added tightening from the Federal Reserve. 

Key Quotes:

Inflation was toned down in October considering the Consumer Price Index increasing 0. 1 percent after two months of 0. 4 percent-in addition to gains.  The yearover-year rate in imitation of edged uphold the length of to 2. 0 percent.  The slowdown reflected a decline in simulation prices as the supply disruptions surrounding Hurricanes Harvey and Irma abated.

Food prices were flat in October and have continued to store more slowly than supplementary items on top of the adding year, occurring 1. 3 percent.  Excluding food and moving picture, inflation was noticeably stronger.  The core index rose a high 0. 2 percent (0. 225 percent back rounding).  That pushed the year-greater than-year fine-flavor happening to 1. 8 percent.  The doing again the considering three months is even more impressive; core prices have liberal at a 2. 4 percent annualized rate, making the slowdown in inflation earlier this year see increasingly performing arts.

The Fed has struggled this year in determining if the slowdown in core inflation has been due to a confluence of one-offs or more persistent disinflationary forces.  We have been of the mindset that the pullback has been due primarily to a few unique factors that see unsustainable.

The pickup clears the quirk for a December rate hike and supports the combat for continued tightening in the year ahead.

The FOMC, however, will be watching the PCE deflator more closely.  While much of the forward estimates for the PCE deflator are derived from the CPI parable, healthcare, which is roughly twice as important in the PCE deflator, is derived from Producer Price Index (PPI) estimates.

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