James Knightley, Senior Economist at ING, notes that the US consumer price inflation rises to 1.5%YoY from 1.1%, suggesting that price pressures are no impediment to policy tightening.
“US consumer price inflation has come in at 0.3%MoM/1.5%YoY, in line with market expectations. Energy was the main upward influence, rising 2.9%MoM, while housing costs rose 0.4%MoM. Outside of these two important categories (energy is 7.1% of the basket, while housing is 42.5% of the basket) inflation pressures were pretty benign with core inflation (ex food & energy) rising 0.1%MoM/2.2%YoY. Energy costs are likely to result in further increases in headline inflation in coming months.
Today’s inflation numbers are certainly no barrier to Federal Reserve rate hikes. Assuming the Presidential election doesn’t result in significant financial market volatility and the employment numbers continue to post reasonable 150k or so gains then the likelihood of a December rate hike will look strong.”