Not a great CPI report heading into the FED meeting

Consumer prices came in soft in August and will not be fazing the doves at the FOMC. Pressured by the oil and gas sector, the CPI fell 0.1 percent in August with the year-on-year rate up only 0.2 percent. The core, which excludes energy and food, rose only 0.1 percent with the year-on-year rate at plus 1.8 percent and still under the Fed’s 2 percent goal.

And details are not great. Energy prices fell 2.0 percent in the month including a 4.1 percent decline in gasoline. Airline fares were down sharply for a second month, 3.1 percent lower.

Showing some rising pressure is apparel, up 0.3 percent for a second straight month in what is the back-to-school . Otherwise, components are flat to steady such as food at plus 0.2 percent or medical care at no change.

The 1.8 percent year-on-year core rate is good but with commodity prices at current levels and the global economy fragile, the outlook for price acceleration remains hard to find.

 

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