US CPI Prep (11th September)
On Thursday, the 11th of September at 08:30 ET, the BLS releases the US CPI data for August.
Here are some views on what to expect.
Overview
The Consumer Price Index (CPI), released monthly by the Bureau of Labor Statistics (BLS), measures the change in prices paid by consumers for a representative basket of goods and services.
Key components include:
Headline CPI: Includes all items—food, energy, and others.
Core CPI: Excludes volatile categories like food and energy, offering a clearer view of underlying inflation trends.
YoY – Forecast: 2.9% | Prior: 2.7% | Range: 3% / 2.7%
MoM – Forecast: 0.3% | Prior: 0.2% | Range: 0.5% / 0.1%
Core YoY – Forecast: 3.1% | Prior: 3.1% | Range: 3.1% / 3%
Core MoM – Forecast: 0.3% | Prior: 0.3% | Range: 0.4% ./ 0.2%
General Expectations
US Stocks
Lower-than-expected CPI or core inflation may boost equities, especially consumer and rate-sensitive sectors.
Higher-than-expected inflation could pressure markets, particularly in growth-sensitive and bond-proxy sectors.
US Dollar
A subdued CPI may weaken the USD, increasing rate cut expectations.
Hotter-than-expected CPI likely strengthens the dollar, as markets anticipate maintained or elevated Fed policy.
Government Bonds
Weaker inflation may drive yields lower (boosting bond prices) as easing gains probability rises.
Stronger inflation could push yields higher on expectations of prolonged monetary restraint.
Federal Reserve Policy
Core CPI rising to 3.1% reinforces the Fed’s cautious tone, potentially delaying rate cuts.
If upcoming data remains soft, the likelihood of rate cuts in late 2025—especially September—may strengthen.
Commentary
Wells Fargo
Core inflation quickened in July, showing broad-based strength across goods and services and illustrating that tariffs are not the only factor keeping inflation sticky. We expect this firmer trend to continue into August, with core CPI rising 0.3% month-on-month, keeping the year-over-year rate at 3.1%. Headline CPI is also expected to pick up, rising 0.3% month-on-month to 2.9% year-over-year, supported by rising food and energy prices. The burst of inventory front-running in Q1 allowed firms to adjust selling prices while awaiting the final impact of tariffs, but stockpiles have now dwindled, leading to steeper customs bills for U.S. firms and ongoing strength in goods inflation.
Despite the firming in goods, spillovers to services inflation are expected to be limited. Physical inputs account for a small portion of overall costs, helping to contain passthrough into service prices. Softening labor conditions are also slowing compensation growth, but real incomes continue to rise, sustaining consumer demand and keeping disinflation in the service sector gradual. Overall, the combination of goods inflation pressures, rising input costs, and steady real incomes suggests that inflation is likely to remain sticky in the near term, even as labor market trends provide some moderating influence.
JPMorgan
We think the outcomes are skewed positively as we think Powell’s Jackson Hole speech cemented a 25bp cut for September. We do not think there is a credible threat to the print that would force the Fed to remain paused in September. However, we do think a materially hawkish print here adjusts the Fed’s reaction function to October and December meetings. Stated plainly, if we see a spike to inflation in this print, then it is likely we will see inflation accelerate into year-end and into 2026. That outcome is likely to keep the Fed on the sidelines for Oct / Dec, especially if GDP growth metrics continue to move higher.
Alternatively, a dovish print will increase expectations for the Fed to cut by 50bp in September, which is a positive tail-risk.
Goldman Sachs
We expect August core CPI to rise 0.36% month-on-month (vs. +0.3% consensus), corresponding to a year-over-year rate of 3.13% (vs. +3.1% consensus). Headline CPI is expected to increase 0.37%, reflecting higher food (+0.35%) and energy (+0.6%) prices. This forecast aligns with a 0.29% increase in core PCE for August.
Key component-level trends driving the August CPI report include: used car prices up 1.2% due to rising auction prices, new car prices up 0.2% from lower dealer incentives, car insurance rising 0.4% based on premiums, and airfares up 3% from seasonal distortions and higher underlying fares. Tariff-related pressure on categories like communication, household furnishings, and recreation is expected to add +0.14pp to core inflation. Over the next few months, tariffs are likely to continue supporting monthly inflation (~0.3%), while underlying trend inflation is expected to moderate due to easing contributions from the housing rental and labor markets, with year-end 2025 core CPI at 3.1% and core PCE at 3.2% (or +2.3% for both measures excluding tariffs).
Previous Release
Headline CPI (m/m, seasonally adjusted): +0.2%, consistent with June’s pace.
Headline CPI (YoY): +2.7%, unchanged from June.
Core CPI (m/m): +0.3%, slightly up from June’s +0.2%.
Core CPI (YoY): +3.1%, rising from +2.9% in June.
Notable Detail: Shelter, healthcare services, recreation, and motor vehicle insurance were among the categories contributing most to inflation. Energy prices continued to decline.
Index markets responded positively, with futures inching higher post-release, signaling rising confidence in a potential Fed rate cut in September.
