The September US CPI inflation report reveals a firming trend and potential re-acceleration of price pressures, marking a significant departure from recent downside surprises. Core CPI reached 0.33%, driven by broad-based increases rather than isolated components like wireless services. Core goods inflation exhibits persistent upward pressure, fueled by rising supply chain costs, elevated energy prices, and tech price increases. This shift narrows the wedge between core CPI and core PCE, altering the landscape for inflation markets and reducing previous headwinds. Consequently, the Federal Reserve faces a more complex decision for its upcoming meeting, as the data challenges the narrative of cooling inflation. Market participants are now closely monitoring official commentary to gauge whether the Fed will maintain a patient stance or pivot toward more aggressive policy action in response to these renewed inflation risks.
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