• Headline CPI for August came in as expected at +0.6%, much higher than the +0.2% reported for July. However, as we take out volatile fuel and food costs, the core CPI print is +0.3% — still a tad hotter than the +0.2% expected and reported a month ago. The last time CPI headline was higher than +0.6% was way back in February 2022. But it’s clear a hike in gasoline prices had a lot to do with this number.
• Year over year, CPI reached +3.7% — again, 10 basis points (bps) higher than expected, and a half-point above the +3.2% reported for July. Core CPI year over year — perhaps the most important figure of them all — was in-line with expectations at +4.3%, and down 40 bps from the previous month’s read. Still, +4.3% core CPI is still more than double the Fed’s optimum inflation rate of +2%.
• Under the hood, this is a better-looking report than the headlines might suggest: aside from Energy, which can fluctuate a lot month over month, prices for consumers look fairly well contained. Owner’s Equivalent Rent has come down, as have Food and Used Cars. Transportation was up +2%, but this may also be aligned with fuel costs. For a little perspective, September 2022 — almost exactly a year ago — we were at +6.6% on core CPI year over year, which were levels we hadn’t seen since runaway inflation in the early 1980s.

_{Source: Zacks Independent Research}