Yesterday's CPI print surprised to the upside. Headline CPI came in at 8.2% y/y against an expectation of 8.1% y/y. However, core CPI is up 6.6% from a year ago. This print matched the previous release and is the fastest rate of change since 1982.
As a result, a 75bps hike on 2 November is the minimum expectation, with a slight possibility of a percentage point.
Used cars and apparel showed a slight decrease in prices, but other than these, inflation is broadly based. Moreover, stickiness persists with shelter costs and medical care being stubbornly persistent. Grocery prices add to this, with rising prices hurting households.
Median inflation continues to rise and is now 7% y/y. This increase is a worrying trend. Until the median series shows moderation, the Fed will remain worried due to its influence on the core number.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.