US August CPI

US CPI figures for the month of August were out overnight and they were higher than expected.

🔥 Core CPI MoM: ⬆️ 0.6% (Est. 0.3%, Prev. 0.3%)

🔥 Core CPI YoY: ⬆️6.3% (Est. 6.1%, Prev. 5.9%)

🔥 Headline CPI MoM: ⬆️0.1% (Est. -0.1%, Prev. 0.0%)

🔥 Headline CPI YoY: ⬆️8.3% (Est. 8.1%, Prev. 8.5%)

Shelter, food and medical care were the main drivers for the increase, more than offsetting a 10%+ decline in gas prices.

In response the market is now pricing ain a 75bp rate rise at a 76% chance and a 100bp rise at 24%. The chance of a 25pb rise has gone to zero.


What’s this mean for Australia? Almost certainly higher interest rates here. If the Fed raise rates by 75bp or 100bp next week (as they almost certainly will) there is very little chance that the RBA will be able to increase rates here by only 25bp. Expect another 50bp increase in October.