CPI M/M
Actual: 0.4%
Previous: 0.1%
Consensus: 0.4% (76% of forecasts)
In line with consensus
CPI Y/Y
Actual: 3.4%
Previous: 3.4%
Consensus: 3.4% (67% of forecasts)
In line, unchanged
Core CPI M/M, the key measure
Actual: 0.3%
Previous: 0.2%
Consensus: 0.2% (88% of forecasts)
Upside surprise, within the anticipated upper tail (10% of forecasts at 0.3%)
Core CPI Y/Y
Actual: 2.4%
Previous: 2.5%
Consensus: 2.4% (82% of forecasts)
In line, slight pullback
The real signal, gasoline drives the shock
Gasoline: +3.9% on the month, over a third of the total headline CPI increase
Overall energy: +2.1% on the month, +16.3% year-on-year
Consistent with the already-documented narrative (Brent above $100, PPI +0.4% driven by diesel +24%)
The key point for the Fed, core surprises to the upside
Core M/M at 0.3% beats consensus (0.2%), a scenario only 10% of forecasters anticipated
This is exactly the scenario flagged as most dollar-positive in the prior analysis
Shelter accelerates to 0.3% (from 0.1% in July), a sharp return after several months of slowing
Communication +2.3%, airline fares +2.7%, education +0.8%, all notably accelerating
Confirms Warsh over Waller
Waller had conditioned his support for a hike on an upside core M/M surprise, before the oil surge
This print delivers exactly that upside surprise despite the changed backdrop
Waller's disinflation argument is now directly contradicted by the data
Sector detail
Medical: -0.2% (decline), auto insurance: -0.8%, the only notable weak spots
Shelter: +0.3%, dominant weight in the index (35.3%), pulls the whole print higher
Used cars: +0.4%, new cars: +0.3%, a sign of durable goods picking back up
Implications
DXY: bullish bias significantly reinforced, this print resolves the ambiguity flagged in the prior analysis
September Fed hike odds: already at 67% before this print, likely to move higher
The Warsh camp (hawkish) comes out clearly strengthened against the Waller camp (dovish), who had explicitly tied his stance to this print
EUR/USD, GBP/USD: likely downward pressure, consistent with the dollar narrative turning after weeks of weakness (Treasury buybacks, Fed tension)
Point of caution
The September FOMC hike is now near-certain barring a major reversal before the meeting
Shelter's contribution (35% of index weight) to the core acceleration is the most important structural point, worth watching over coming months to see if this trend holds or reverses
This print confirms the thesis that the oil shock is starting to spread beyond direct energy costs (cf. communication, transport, education, all accelerating)