United States: August inflation profile – TD Securities

TD Securities' Macro Research team, under the guidance of Oscar Munoz and Molly Brooks, forecasts a more robust US August CPI profile. Headline CPI is expected to climb 0.39% month-over-month, driven by surges in gasoline and food prices. Core CPI is predicted at 0.24% month-over-month, while services and shelter components will contribute to a stronger supercore measure, indicating sustained underlying price pressures.

After the July CPI release, TD Securities is offering an initial look at their August projection, based on various assumptions that may change as more data becomes available, particularly for volatile segments such as gasoline prices, hotel rates, and airfares. The headline inflation is anticipated to gain further momentum in August, rising 0.39% m/m after a more subdued 0.07% m/m increase in July (CPI NSA index: 334.912, versus the current market fix at 334.890).

An initial uptick in gasoline prices since May is expected, alongside accelerating food price inflation. The preliminary forecast for August's core CPI is 0.24% m/m (up slightly from 0.22% in July), which aligns with a core PCE increase of 0.20%. Core goods prices are projected to decline after rebounding in July, partially due to a broad decrease in tariff-exposed categories, although new vehicle prices are likely to offset this.

Services inflation is forecast to accelerate following last month's rebound, with shelter prices potentially increasing due to higher OER and rents, and positive inflation in hotel rates after a decline in June-July. Strengthening airfares and vehicle insurance are also expected to bolster transportation services inflation.