Transitory Inflation Outlook Remains Challenged
James Picerno | Oct 28, 2021 03:26PM ET
It’s premature to rule out the possibility that US inflation will peak in the months ahead, but recent projections that the peaking is imminent and will reflect a sharp decline in pricing pressure now looks unlikely.
Today’s update of CapitalSpectator.com’s .
For context, let’s begin with the actual data via the Consumer Price Index (CPI), which rose 5.4% year-over-year through September at headline level—slightly higher than the 5.3% annual increase in the previous month. Core CPI, which removes food and energy prices and is thought to be a better measure of the trend, held steady at a lower 4.0% rate. That’s below June’s 4.5% peak, but core inflation is still running close to the highest pace in three decades.
ITI’s new estimate for October is slightly higher than the Oct. 14 update and serves as a reminder that the inflation trend continues to show signs of holding steady, if not edging higher.
Monthly changes for ITI through October still indicate a relatively contained, stable profile after the surges recorded earlier in the year. But today’s revision shows a slight increase for this month vs. the flat performance previously reported.
The key takeaway is that elevated inflation is still expected to persist. The good news is that a further acceleration in CPI’s one-year trend appears to be a low-probability scenario, based on available data. On that basis, the upcoming October CPI report (scheduled for Nov. 10) is expected to post a one-year change that’s more or less in line with September’s update.
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