The projected increase underlines the resilience of the inflation of the services, particularly in housing, medical care and other central components, despite the prolonged Fed adjustment campaign. Such impulse maintains the inflation of the nucleus running above the rhythm required to achieve the annual objective of 2%, leaving the political leaders in a difficult act of balance between stopping inflation and avoiding a strong economic deceleration.
The holder’s inflation remains stable
About the year after year (interannual), it is forecast that the main CPI will remain widely without changes in 2.8%-2.9%. The central ICC, which excludes food and energy prices, is forecast to be 3.1% year -on -year, in line with last month, which can calm fears about an increase related to the rate in inflation. While this stability may seem reassuring, hides the underlying monthly dynamics that continues to generate ascending pressure on prices.
Energy costs remain a swing factor, with the recent volatility of the oil market and gasoline demand adding uncertainty to final printing. Meanwhile, food price developments remain mixed as basic products markets respond to changing climatic conditions, supply chain interruptions and seasonal patterns.
Tariff impacts still to filter through
Recent tariff measures can begin to show a significant effect on August data. Supply chain delays mean that companies often absorb costs in the short term before gradually passing them to consumers, but in autumn retailers traditionally tend to increase their prices. Therefore, merchants remain alert about the possibility that IPC impressions in the last part of this year can reflect more pronounced inflation driven by the rate.
Policy implications: Spotlight in September FOMC
With the next FED policy meeting, scheduled for September 16 to 17, the launch of the August CPI is more important. The officials have emphasized their data dependent approach, making this impression, following the much weaker employment data than the expected last week, fundamental for market expectations.
Although the current market price suggests nearby certainty (88%) around a September rate cut of Fed 25-Basis Point, there is an expectation of 12% of a 50 BP cut despite the persistently high central inflation that reinforces the case to maintain a constant approach to reduce rates.
According to CME Fedwatch tool analysts, they hope to see three 25 BPS rates cuts this year (compared to two one month) and another three next year.
