No Inflation Here: Core August CPI Hits 0.0%

The numbers: The headline CPI of 0.3% was a tad hotter than estimated. The core of 0.0% is a tad cooler than expected.

This is a fine, benign reading for the most part.  Yes, 0.0% is close to negative, but for markets this means the Fed has room to act if need be.

Stocks are not moving much on this number. They’re still indicated to open higher, though lower than it seemed earlier before a fresh round of Irish rumours jarred the market.

Background: Ostensibly the big risk to the economy is deflation, and yet… it almost feels as though an inflationary reading would be the real risk, not because inflation wouldn’t be welcome, but because it would complicate the Fed’s decision on whether to step in.

Analysts are looking for a 0.2% CPI reading, and a 0.1% CPI reading. Yesterday’s PPI reading came in on the hot side, so we’ll see if what’s happening on the producer, wholesale level is bleeding through to the end consumer.

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