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Weekly economic review & outlook
Core inflation edging higher; solid consumer

You Need to Know

Week in review

CPI up a bit, but core rose strongly

The overall CPI rose by only a small 0.1 percent for August as gasoline prices plummeted – but the core rose by a strong 0.3 percent.

Solid, if slower, retail sales for August with positive consumer fundamentals

Retail sales grew by 0.4 percent for August, powered by a jump in auto sales but held back by falling gasoline prices.

Week Ahead

Forecasts

Industrial production may edge up for August

While manufacturing activity is slipping, warmer temperatures boosted utility output and oil production rose – suggesting overall IP edged higher.

Another 25 basis point easing move by the Fed

In this week’s FOMC meeting, we expect that the policymakers will lower the target range for the federal funds rate to 1.75-2.00 percent.

Overall inflation remained quiescent in August, with the consumer price index (CPI) up by only 0.1 percent. This small monthly gain pushed the 12-month trend rate down to 1.7 percent – well below the Federal Reserve’s long-term goal of 2.0 percent. The Fed uses the broader price index for personal consumption expenditures (PCE) as its preferred inflation measure, but the PCE price index and the CPI tend to move similarly (albeit with the former at a somewhat lower level). A sharp drop in energy prices kept inflation low last month, with crude oil prices falling by 4.6 percent (pulling average the price of a gallon of gasoline down by 4.1 percent).

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