August CPI Preview: Energy Prices Spark Inflation Concerns
The U.S. Bureau of Labor Statistics is set to release the Consumer Price Index (CPI) for August on September 11, a key data point before the Federal Reserve's policy meeting on September 15-16.
Market expectations are for a 0.4% month-over-month increase in headline CPI, significantly higher than July's 0.1%, while year-over-year growth is expected to remain at 3.4%. Core CPI is projected to rise by 0.2% month-over-month and slow further from 2.5% to 2.4% year-over-year.
The recent surge in international oil prices, with Brent crude breaking above $100, is seen as a significant factor driving the acceleration in August's headline inflation. However, core inflation expectations have not risen in tandem, with the market expecting core CPI to remain flat at 0.2% month-over-month.
Investors are focusing on core CPI and sub-components such as shelter and services in this release. A higher-than-expected core CPI could indicate that price pressures extend beyond energy, while a lower-than-expected figure would suggest underlying inflation continues to cool slowly.