CPI surprises largely temporary, shouldn’t derail monetary easing
by James Langton
Advisor
While the latest U.S. inflation reading was stronger than expected, that upside surprise is unlikely to derail the U.S. Federal Reserve Board’s view that price pressures are cooling, says Moody’s Ratings.
In a new report, the rating agency noted that, despite the strong headline consumer price index (CPI) reading last week and the uptick in core inflation, much of the upside surprise was driven by temporary gains in certain volatile components of the index. Further, other details of the data were more encouraging.
“Importantly, shelter inflation, which has been particularly sticky, cooled to 0.2%, down sharply from 0.5% in August,” it said.
Additionally, the rise in core inflation “was driven up by one-off price jumps in the volatile goods and services sub-categories,” it noted.