Deutsche Bank's View on CPI - FJElite

Going onto more detail on the week ahead, the main event is US CPI on Wednesday. Our economists expect headline CPI to rise +0.57% MoM in September, up from +0.40% in August, largely because seasonally adjusted motor-fuel prices are expected to jump 9.6%. That would lift headline inflation to around 3.64% YoY. The core picture should be much softer: our economists expect +0.16% MoM, down from +0.29%, taking the annual rate down a couple of basis points to 2.39%. Within core, they expect goods prices to be unchanged, with lower used-car and medical-care commodity prices offset by firmer recreation and IT goods. On services, last month’s jump in wireless prices should roll off, although higher jet-fuel costs should support airfares. The contrast between a fuel-driven headline acceleration and a softer underlying core print will clearly be important for the Fed, particularly given recent messaging that further tightening may be needed but is not urgent.