CPI about in line, 50 bps rate cut odds down to just...

August CPI rose .2% headline and .3% core m/o/m with the former as expected and the latter one tenth above. Due to rounding, the y/o/y figures were in line at 2.5% and 3.2% respectively. Energy prices were down by .8% m/o/m and 4% y/o/y. Food prices rose .1% m/o/m and 2.1% y/o/y. Eating out continues to be where the food inflation is as prices here rose .3% m/o/m and 4% y/o/y. Offsetting this is eating at home as prices were flat m/o/m and up just .9% y/o/y.

Services inflation ex energy rose .4% m/o/m and 4.9% y/o/y and continues to be driven by higher rents as calculated here. Yes, they are delayed in reflecting the reality on the ground but they NEVER fully reflected the rise seen a few years ago. Owners’ equivalent rent was up .5% m/o/m and 5.4% y/o/y. Rent of Primary Residence saw a .4% m/o/m and 5% y/o/y increase. In reality, blended rents are rising by 2-3%. The other major contributor to CPI is medical care where prices fell for a 2^nd month, by one tenth m/o/m, though are up 3% y/o/y. Keeping a lid on prices in healthcare was the one tenth fall in ‘professional services’ which includes lower prices for dental and eye care and no change in physicians services. Hospital care though rose .4% m/o/m and by 5.8% y/o/y. Health insurance prices rose .1% m/o/m and by 3.8% y/o/y and that reality does not exist unfortunately, and is dramatically understanding reality.