For the first time since February, core consumer prices did not come in below expectations, hitting the consensus with a modest but useful 0.2 percent gain. Overall prices rose 1 tenth more than expectations at an energy-inflated 0.4 percent.
Looking first at core readings, housing, which is the report's dominant component, has been moderating but picked back up in August to a 0.4 percent gain. Within housing, lodging away from home reversed July's unusual plunge with a 4.4 percent surge while owners' equivalent rent rose 0.3 percent. Wireless telephone services have been very weak this year but contraction eased in August, to only a 0.1 percent decline. Prices for new vehicles were flat, used vehicles dipped 0.2 percent, while transportation services, reflecting a 1.0 percent jump in insurance, rose 0.4 percent. When including motor fuel, transportation costs rose a very sharp 1.4 percent.
Energy costs, in part reflecting month-end pressure from Hurricane Harvey, jumped 2.8 percent with gasoline up 6.3 percent. Food was not a factor in August showing a 0.1 percent rise.
Year-on-year rates are mixed with overall prices up 2 tenths to 1.9 percent but the core holding flat at a subpar 1.7 percent. Despite lack of progress in the core, August results are not a disappointment and will definitely heat up support for the beginning of balance-sheet unwinding at next week's FOMC.
Recent History Of This Indicator
Econoday's consensus is calling for a needed uptick in consumer prices, to a monthly consensus gain of 0.3 percent in August vs only a 0.1 percent rise in July. Higher energy prices, which were on the rise even before Hurricane Harvey hit at month end, are expected to provide the lift as the consensus for the core rate, which excludes energy and also food, is for only a 0.2 percent gain vs July's 0.1 percent rise. Year-on-year readings have been very soft, at only 1.7 percent for both July's headline and the core with August's consensus at 1.9 percent overall but only 1.6 percent for the core. Holding down prices has been moderation in housing costs and also declines in vehicle prices and especially communication costs.