Will the US CPI announced tonight be re-accelerated due to high crude oil prices and observations of interest rate hikes in November intensify

The US Bureau of Labor Statistics21:30 on 2023/9/13 (Wed) Japan timeuponUS Consumer Price Index (CPI) for AugustIt is scheduled to be announced.

The Federal Reserve (Fed) will look for signs that the broad inflation trend has slowed down even in August, when energy prices soared. According to Bloomberg data, the CPI (year-over-year ratio) for August is expected to rise to 3.6% from 3.2% in July. It is said that this is largely due to rising global energy prices. Gasoline prices rose by more than 10% from July to August on a seasonally adjusted basis. There is a high possibility that overall energy prices also recorded a rapid monthly increase since mid-2022.

According to the PMI price index, stubborn inflation continued in August. The US CPI is consistent with the trend suggested by the S&P Global US PMI Price Index, and is expected to stick around 3% in the coming months. Meanwhile, if the consumer price index (CPI) to be announced this time exceeds expectations, there is a possibility that assets will be re-evaluated.

●Food inflation
The rise in food prices has slowed significantly. The FAO Food Price Index prepared by the United Nations Food and Agriculture Organization (FAO) began to decline again in August. Although sugar prices continued to rise, prices of vegetable oil, grains, meat, and dairy products fell more rapidly, which was the main reason for the decline in the index.

●Used car prices
Mannheim used car price indexAccording to the report, seasonally adjusted prices in major market segments fell in August compared to the same month last year, resulting in a 7.7% decrease. Compact cars were the most sluggish compared to the same month last year, with a 13.3% decline, followed by a 12.0% decline in mid-size cars and 8.8% in luxury cars.

Also, according to CarGurus data, car prices in the US have put an end to the upward trend since the second quarter of this year.

●Housing inflation
Housing and rental rates, which account for the largest percentage in the service sector, declined on a monthly basis in line with further increases in vacancy rates. According to Apartment List, rents across the United States fell 0.1% from the previous month and 1.2% from the same month last year.

●Other notable data
The rice import price index is scheduled to be announced this Friday. Affected by the upward trend in shipping prices, the index is expected to rise once and then fall.

The University of Michigan is also scheduled to announce the expected inflation rate for 1 and 5 years for September on Friday. The previous month, the 5-year forecast inflation rate remained at 3%, but the 1-year forecast inflation rate rose to 3.5%.

●The Fed's next move
According to recent data, the sense of overheat in the labor market is weakening. It seems that Fed executives generally agreed to keep interest rates unchanged at the 9/19-20 meeting. Thus, time can be obtained to further assess economic trends affected by interest rate hikes.The more important discussion, however, is whether the Fed will go ahead with additional interest rate hikes in November or December。

According to forecasts to be announced after the monetary policy meeting in September, it is believed that there is still a high possibility of additional interest rate hikes. However, it is unknown whether additional interest rate increases will be implemented.Some policy makers are concerned about the end of tightening policies because there is a possibility that monetary tightening policies will turn out to be insufficient after a few months。

However, if it turns out that one more interest rate hike is unnecessarySome officials worry that withdrawing interest rate hikes would be more confusing and costly than hawkish colleagues thought.

According to CME Fedwatch, the market expects the probability of an interest rate hike in September to be 7% and the probability of an interest rate hike in November to be 44.6%.