.jpg "Inflation Prints to Set the Tone This Week Photo")
This week’s inflation reports — the Consumer Price Index (CPI) out Wednesday, followed by Thursday’s Producer Price Index (PPI) release — will likely set the tone for market activity this week.1 With recent economic data surprising to the upside and commodity prices on the rise, investors are beginning to grow more concerned that at least one more Federal Reserve (Fed) rate hike may be in store before the end of the year.
Headline CPI is expected to come in at 0.6% — the highest reading in more than a year — with increased energy prices being the biggest driver.2 Core CPI — excluding food and energy prices — is expected to provide significantly better news for Fed policymakers, registering its third consecutive 0.2% monthly print.3 The PPI report will likely tell a similar story with higher energy costs expected to boost the headline number to 0.4%, twice the 0.2% forecasted for core producer prices.
Thursday’s retail sales report will also be closely watched for any signs that elevated debt levels are starting to weigh on consumer spending. The Atlanta Fed’s GDPNow model estimate of 5.6% for third quarter economic growth suggests the long-anticipated demise of the U.S. consumer has yet to materialize.4
Sources:
1MarketWatch – U.S. Economic Calendar; as of 9/11/23
2U.S. News & World Report – The Rosy Inflation Narrative Is About to Take a Turn for the Worse; 9/11/23
3U.S. Bureau of Labor Statistics – Consumer Price Index News Release; 8/10/23
4Federal Reserve Bank of Atlanta – Atlanta Fed GDPNow Estimate for 2023: Q3; 9/8/23
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