Inflation Outlook – Looking Forward to August Data

If the Cleveland Fed nowcasts are accurate, m/m CPI inflation will be down, core CPI rising slightly.

Figure 1: Month-on-month annualized inflation from CPI-all urban (blue), and nowcast as of 8/30 (light blue square),from personal consumption expenditure (PCE) deflator (black), chained CPI(brown), sticky price CPI (green), and 16% trimmed mean CPI (red). Chained CPI inflation seasonally adjusted by author. Source: BLS, Atlanta Fed, Cleveland Fed, via FRED, Cleveland Fed, and author’s calculations.

Figure 2: Month-on-month annualized inflation from CPI-all urban (blue), and nowcast as of 8/30 (light blue square), from personal consumption expenditure (PCE) deflator (black), chained CPI(brown), and sticky price CPI (green). Chained CPI inflation seasonally adjusted by author. Source: BLS, Atlanta Fed, Cleveland Fed, via FRED, Cleveland Fed, NBER, and author’s calculations.

Note that both headline and core year-on-year inflation rates will show up as rising if these nowcasts are accurate – largely because of the April-June surge in the index levels.