U.S. consumer price inflation likely to have picked up in August – TD Economics

The U.S. consumer price inflation is likely to have picked up in August. According to a TD Economics research report, the CPI inflation is expected to have picked up to 1.9 percent in the month, with prices rising 0.4 percent sequentially. Energy prices are expected to have been a considerable boost this month after Hurricane Harvey that shuttered around one quarter of the nation’s refinery output. Gasoline prices are expected to have increased almost 6 percent sequentially, with an even more solid rise expected in September. This would leave the headline inflation on track to breach 2 percent year-on-year by October.

Meanwhile, core rate is expected to have returned to a 0.2 percent sequential print though unfavourable base effects leave the year-on-year rate lower at 1.6 percent. August gains are expected to have been greatly driven by a recovery in hotel prices that dropped in the prior two months. Moreover, some further stabilization in core goods prices, led by apparel and presaged by higher import prices, along with stable strength in OER and rents are expected to drive the pickup and counter a possible persistent drag from past categories of weakness, namely vehicle prices and wireless services.

However, risks are tilted to the downside as the uncertain retail landscape implies scope for more disappointment ahead. Additional downside realized in core prices might possibly drive greater caution amongst Fed policymakers in future rate hikes, stated TD Economics.

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest