TD Securities projects August Core CPI at 0.19% m\/m and 2.3% y\/y, with services driving gains and core goods slightly negative. Headline CPI is seen at 0.37% m\/m and 3.4% y\/y on higher energy and food. The bank notes upside risks from assumptions of large price declines in tariff\u2011exposed goods categories.<\/p>\n
Core prices seen under control<\/p>\n
“We expect August CPI to report that underlying inflation stayed under control, with core likely rising 0.19% m\/m (2.3% y\/y). The services segment should be the main driver, while core goods prices likely acted as a drag by posting a modest m\/m drop.”<\/p>\n
“Headline CPI will likely be a stronger 0.37% m\/m (3.4% y\/y) due to rising energy prices and a slight pickup in food inflation.”<\/p>\n
“We see the risks to our forecasts as skewed to the upside given that we’re assuming a number of large price declines in tariff-exposed goods categories, including apparel and household goods.”<\/p>\n
“This will also be the first month of PCE with the BEA’s revisions, that we expect will push down y\/y core inflation around 0.2pp.”<\/p>\n
“Inflationary risks are still prevalent, which was evident in the respondent comments from last week’s ISMs.”<\/p>\n