Inflation may be cooling off with August core CPI rising 0.1%, well below the expected 0.3% rise. The headline figure rose 0.3%, slightly below the 0.4% expectation, fueled by higher gas prices (+2.8%) as well as food (+0.4%). Helping keep the numbers lower was airfare’s plunge of 9.1% and a 2.9% fall in hotel rates, both hurt by Delta concerns. Also, used car prices, something we’ve talked a lot about, fell 1.5%. The first decline since February and hopefully the start of a longer trend.
Big surprise in August’s retail sales, increasing 0.7%, while expectations were for a 0.7% drop. Strength in online, furniture and general merchandise categories fueled the rise, while autos and electronics fell by 3.6% and 3.1%, respectively. The weak auto sales are likely due to the chip shortage as well as the massive run-up in prices that have just started to come back down.
Eyes will turn to the Fed next week with the FOMC meeting September 21-22.