CIBC Research discusses its reaction to today's US CPI data print for the month of August.
"Today's CPI figures echoed some of the softness seen in producer prices yesterday, with both headline and core measures coming in below consensus expectations. Headline CPI rose 0.2%, for a 2.7% year-over-year pace (consensus 0.3%, 2.8%). Energy prices were the expected positive for inflation over the month, with most of the disappointment relative to our forecast coming from a mere 0.1% (0.08% to 2dpl) gain in core CPI. The main driver of that weakness appears to be a -0.3% result for "commodities ex food/energy", which included a big 1.6% decline in apparel prices.
The below trend gain in core CPI over the month leaves the annual pace at 2.2%, the weakest since April. However, while softer than expected, that's still consistent with core PCE running only slightly under the Fed's 2% target, and as such won't change the near-term debate regarding rate hikes. However, if core inflation doesn't pick up more meaningfully next year, that would result in an even more gradual pace of rate hikes," CIBC notes.
As such today's figures may be slightly negative for the US$ and see long-term yields fall a little," CIBC adds.