Haitong Securities released a research report stating that, overall, the core inflation in the United States remains at a relatively high level, and the easing of overall inflation is mainly due to the contribution of the easing of energy inflation. Market expectations for rate cuts are generally stable. According to CME observations, as of October 11th, the market expects the Federal Reserve to continue to cut rates in November with a high probability, with a rate cut of 25 basis points, and expects the total rate cut for the year to be around 50 basis points.
The core inflation in the United States has slightly rebounded. In September, the U.S. CPI increased by 2.4% year-on-year, down by 0.1 percentage points from August, reaching the lowest point since February 2021. However, the core CPI increased by 3.3% year-on-year, rebounding by 0.1 percentage points from August. The CPI in September was 0.2% month-on-month, the same as in August; while the core CPI seasonally adjusted month-on-month continued to rebound to 0.31%, significantly higher than the previous three months of 0.28%, 0.17%, and 0.06%, reaching the highest point since March. In addition, the core CPI seasonally adjusted month-on-month annualized rate in September was 3.8%, rebounding for three consecutive months, reaching the highest point since March.
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Looking at the structure of the CPI, the easing of inflation in September is still related to the easing of energy prices. In September, energy inflation was -6.8% year-on-year, a significant drop of 2.8 percentage points from August; the month-on-month decline in energy inflation widened to -1.9%, which was the key factor in the easing of overall inflation in September. In fact, the easing of inflation in the past two months has been due to the contribution of the easing of energy inflation.
In detail: Core goods continue to play a role, but the contribution continues to weaken. In September, goods inflation was -1.3% year-on-year, remaining in the negative range for four consecutive months, but the year-on-year decline in core goods inflation narrowed to -1.0%, mainly due to the significant weakening of the contribution from used cars. In September, the year-on-year decline in used car prices narrowed from -10.4% to -5.1%, and the month-on-month change also turned positive from -1.0% to 0.3%, for the first time since May.
Core service inflation continues to ease. In September, service inflation was 4.7% year-on-year, down by 0.1 percentage points from August; service inflation was 0.4% month-on-month, up by 0.1 percentage points from August. However, core service inflation was 4.7% year-on-year, down by 0.2 percentage points from August; especially the core inflation month-on-month was 0.4%, the same as in August. Among them, rent inflation has eased to some extent, with the month-on-month inflation of primary residence rent falling from 0.4% in August to 0.3%, and the month-on-month inflation of owner's equivalent rent falling from 0.5% in August to 0.4%.
Core service inflation excluding rent has rebounded. In September, service inflation excluding rent was 0.6% month-on-month, significantly up by 0.5 percentage points from August, reaching the highest point since March. For example, in September, the price of medical care services turned positive significantly to 0.7% month-on-month; in September, the price of public transportation was as high as 2.4% month-on-month.