Fed officials have been cautious about the gains in inflation in recent speeches arguing that it remains too high. Today the US CPI data will be released at 8:30 AM. The expectation to show:
- CPI month-to-month 0.1% versus 0.4% last month
- CPI year on year 3.3% versus 3.7% last month
- Core CPI month-to-month 0.3% versus 0.3% last month
- Core CPI year on year 4.1% versus 4.1% last month
- The CPI index is expected at 307.857 versus 307.789 last month
Markets tend to focus on the rents component as it has been a major contributor to the inflation over the last year+. YoY shelter was up 7.2% YoY in September after a gain of 0.6%.
This month the modest increase of 0.1% is partly due to a 2.4% decline in energy prices in October, the first monthly decline since May.
Also of interest is medical expenses. While medical care has previously weighed down on CPI, it is expected to contribute to core CPI for the next six months, with an estimated 0.4% increase in core CPI this month
Ahead of the CPI, the markets are pricing in a 15% chance for a hike in December. Fed officials have said that they are open to a additional hike if inflation does not come under control.