United States: Core CPI and PCE re-accelerate – TD Securities
TD Securities economists report that US CPI has surprised to the upside for a second month, with core CPI at 0.3% m/m and broad-based strength in goods and services. Supercore remains elevated, and the translation into core PCE is strong, lifting their estimate to 0.36% m/m.
US CPI and PCE inflation have unexpectedly risen in September, with the core Consumer Price Index (CPI) accelerating to 0.3% month-over-month (m/m) and the core Personal Consumption Expenditures (PCE) forecast increasing to 0.36% m/m. This represents a significant gain in both services and goods inflation, particularly due to a strong surge in the output index (OER) and solid transportation and recreation prices.
The headline CPI is expected to print at 0.6% (0.649% unrounded) after a 9% m/m spike in gasoline prices, while the broader PCE is forecasted at 0.53% (3.7% y/y). The upcoming Producer Price Index (PPI) data, which includes key contributors such as healthcare, airfares, insurance, and legal services, will provide further insight into the underlying market-based inflation.
Despite the recent strength in CPI, the forecast anticipates a quicker acceleration compared to the previous month's core CPI and PCE readings.
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