Real-time core inflation correctly signals acceleration
A quick recap following today’s BLS release. The real-time data captured the acceleration in core inflation over August - whether one looks at Headline ex Energy ex Food (the first figure below) or also ex Shelter (the second), though the magnitude was a bit less pronounced than in the official print.
This followed from correctly anticipating the acceleration in both core Housing and Transportation Services as well as strength (vs consensus) in core Transport goods, and despite expecting a stronger real-time Airfares print for August than in the BLS print, with a good match on the Transport sector overall.
By contrast, the online data anticipated continued declines in the headline index, not the modest increase of 0.1 percent after last month’s flat print, following a slightly greater decline in the real-time Gasoline index and a significant divergence in the real-time ‘Food at Home’ index vs the BLS prints. We do expect the weakness we’re seeing in the real-time ‘Food at Home’ CPIs to be reflected in the official data by Q4.
The big divergence between the official print and the real-time data was in Core Goods, where we continue to see quite marked weakness across sectors. The BLS release showed upticks across general merchandise categories—in Apparel, Housing, and Recreation goods, that was not matched by the online price indexes. While the magnitudes of the differences may simply reflect noise, we expect the direction to resolve towards weakness in core goods prices in the months to come.
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