Thursday's highly anticipated Consumer Price Index (CPI) report surprised to the upside. Headline CPI rose 0.4% in September, 0.2 percentage points higher than expected by the Bloomberg consensus. Over the year, the CPI is up 8.2%, a slight step down from August's 8.3% reading. Even with some easing on a year-ago basis, the details of the report suggest inflation still has plenty of momentum and remains broad-based.
Gas prices slid 4.9% last month, helping to offset some solid increases seen elsewhere in the consumption basket. Food price growth remains a major pressure point. The food CPI rose 0.8% in September, trailing only modestly behind the 1.0% average pace over the prior three months. On the bright side, we suspect food inflation will not worsen from here. Food-related commodity prices have rolled over, and in the separately-reported Producer Price Index, transportation and warehousing costs slid for the third consecutive month in September, providing scope for disinflation in food, and goods prices more broadly, in the coming months.
Excluding food and energy, the core CPI rose 0.6% in September, matching August's pace and pushing the year-ago rate up to a fresh 40-year high of 6.6%. Core goods prices were flat over the month, with notable declines in used vehicles (-1.1%), education & communication goods (-0.6%) and apparel (-0.3%). Core services, on the other hand, rose a blistering 0.8%. Strength was broad-based, with sturdy increases in transportation services (1.9%), medical care (1.0%) and owners equivalent rent (0.8%). In short, services inflation continues to gain traction, while goods inflation is showing signs of slowing. For insight on what the latest consumer price data mean for the FOMC's thinking, please see this week's Interest Rate Watch.
This Week's State Of The Economy - What Is Ahead? - 01 December 2023
Wells Fargo Economics & Financial Report / Dec 05, 2023
U.S. data released this week indicates the economic expansion remains alive even as inflation continues to slow. The year-ago rates of headline and core PCE inflation were the lowest since March 2021 and April 2021, respectively.
This Week's State Of The Economy - What Is Ahead? - 07 October 2022
Wells Fargo Economics & Financial Report / Oct 10, 2022
higher interest rates and inflation appear to be weighing on manufacturing and construction, yet service sector activity remains fairly resilient.
This Week's State Of The Economy - What Is Ahead? - 23 September 2022
Wells Fargo Economics & Financial Report / Sep 27, 2022
The FOMC raised the target range for the fed funds rate by 75 bps for the third consecutive time. The housing market continues to buckle under the pressure of higher mortgage rates.
This Week's State Of The Economy - What Is Ahead? - 09 April 2021
Wells Fargo Economics & Financial Report / Apr 10, 2021
This week\'s economic data kicked of with a bang. The ISM Services Index jumped more than eight points to 63.7, signaling the fastest pace of expansion in the index\'s 24-year history.
This Week's State Of The Economy - What Is Ahead? - 10 September 2021
Wells Fargo Economics & Financial Report / Sep 13, 2021
Data from the opening weekend of College Football indicates that we will have to endure another season of Nick Saban deification.
This Week's State Of The Economy-What Is Ahead?
Wells Fargo Economics & Financial Report / Aug 03, 2019
How will Fed rates-cut and Trump 10% tariff on $300 Billion Chinese Goods countered by Chinese currency devaluation against Dollar, affect inflation and economic slowdown in US economy?
This Week's State Of The Economy - What Is Ahead? - 27 January 2023
Wells Fargo Economics & Financial Report / Jan 28, 2023
Real GDP expanded at a 2.9% annualized pace in Q4. While beating expectations, the underlying details were not as encouraging. Moreover, the weakening monthly indicator performances to end the year suggest the decelerating trend will continue in Q1.
This Week's State Of The Economy - What Is Ahead? - 16 August 2019
Wells Fargo Economics & Financial Report / Aug 17, 2019
Markets gyrated this week as the spread between the ten- and two-year Treasury\'s turned negative for the first time since 2007. Financial markets seem to expect that the sharp slowdown in growth overseas will soon spread to the United States.
This Week's State Of The Economy - What Is Ahead? - 28 October 2022
Wells Fargo Economics & Financial Report / Oct 31, 2022
Headline GDP continues to send mixed signals on the direction of the U.S. economy. During Q3, real GDP rose at a 2.6% annualized rate, ending the recent string of quarterly declines in growth registered in the first half of 2022.
This Week's State Of The Economy - What Is Ahead? - 27 August 2021
Wells Fargo Economics & Financial Report / Aug 30, 2021
In other economic news, output continues to ramp up across the U.S., even as the resurgence in COVID cases is leading to some pullback in consumer engagement.