U.S. headline inflation remains stable in September, FED likely to cut rates by end-2019
Source: FxWire Pro - Commentary / 10 Oct 2019 13:16:04 America/New_York
U.S. headline inflation accelerated modestly in September. On a sequential basis, inflation rose 0.1 percent, whereas it came in at an unchanged rate of 1.7 percent on a year-on-year basis.
Meanwhile, core inflation rate came in at 0.1 percent sequentially, a bit lower than market expectations. On a year-on-year basis, inflation rate remained at 2.4 percent, the same as in August. The modest reading in core prices was because of weaker prices for core goods items. Prices dropped for used cars and trucks, apparel, new vehicles, and medical care commodities. But even with these priced drops, core goods prices are still up versus a year ago, noted TD Economics in a research report.
Core services prices came in slightly stronger, rising 0.3 percent sequentially in the month. Key sources of inflation over the past year saw price rises: namely shelter and medical care. Core services inflation rose 2.9 percent year-on-year basis.
Energy and food prices continued to put downward pressure on headline inflation in September. Food prices rose just 0.1 percent sequentially and were up 1.8 percent year-on-year. Energy prices dropped 1.4 percent sequentially and 4.8 percent year-on-year.
September’s inflation data lends support to those on the FOMC who are less concerned about an imminent pick-up in inflation, stated TD Economics.
“The Fed's preferred core inflation measure, core PCE, is typically a few ticks lower than CPI, so it is likely to still be close to the Fed's 2 percent target. We expect the Fed will focus more on the clouds looming over the global economy, and deteriorating business confidence and investment activity at home to justify cutting rates one more time before the end of the year”, added TD Economics.© FxWire Pro 2019. All rights reserved. The FxWire Pro content received through this service is the intellectual property of FxWire Pro or its third party suppliers. Republication or redistribution of content provided by FxWire Pro is expressly prohibited without the prior written consent of FxWire Pro, except for personal and non-commercial use. Neither FxWire Pro nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.