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CPI Hotter on Fuel Costs, In-Line at +4.3% Core YoY
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Pre-market futures this morning — prior to the big Consumer Price Index (CPI) report — were down modestly, but have ratcheted down another peg on the release of this important data on inflation. The Dow went from -10 points to -83 points to -60 points in a manner of minutes, the S&P 500 moved from -1.5 points to -15 to -10, and the Nasdaq from -4 points to -60 points, where it has remained. These moves are a direct result of the reaction to CPI numbers for August.
Headline CPI came in as expected at +0.6%, much higher than the +0.2% reported for July. However, as we take out volatile fuel and food costs, the core CPI print is +0.3% — still a tad hotter than the +0.2% expected and reported a month ago. The last time CPI headline was higher than +0.6% was way back in February 2022. But it’s clear a hike in gasoline prices had a lot to do with this number.
Year over year, CPI reached +3.7% — again, 10 basis points (bps) higher than expected, and a half-point above the +3.2% reported for July. Core CPI year over year — perhaps the most important figure of them all — was in-line with expectations at +4.3%, and down 40 bps from the previous month’s read. Still, +4.3% core CPI is still more than double the Fed’s optimum inflation rate of +2%. That said, we’ve not seen a sub-4% number in this metric since May of 2021.
Under the hood, this is a better-looking report than he headlines might suggest: aside from Energy, which can fluctuate a lot month over month, prices for consumers look fairly well contained. Owner’s Equivalent Rent has come down, as have Food and Used Cars. Transportation was up +2%, but this may also be aligned with fuel costs. For a little perspective, September 2022 — almost exactly a year ago — we were at +6.6% on core CPI year over year, which were levels we hadn’t seen since runaway inflation of the early 1980s. Coming down 230 bps in a year on a sticky inflation metric is nothing to sneeze at.
Pre-market traders appear to be in agreement with this assessment: currently, both the Dow and S&P are flat, while the Nasdaq is currently down a scant -7 points minutes before the opening bell. The jury may still be out regarding what the Fed ultimately decides to do about interest rate levels a week from now, but this data is not screaming for another rate hike — at least not from this bird’s eye view.
Cracker Barrel Old Country Store (CBRL - Free Report) released fiscal Q4 earnings ahead of today’s open, with mixed results not damaging its share price in early trading (perhaps because the stock is -21% year to date). Earnings of $1.79 per share outpaced the Zacks consensus by 11 cents, while revenues of $836.7 million came up short of the $842.7 million forecast. Restaurant comps grew +2.4% on +8.7% menu pricing, while its Retail segment fell -6.8% year over year. Shares are up modestly on the news.
Image: Bigstock
CPI Hotter on Fuel Costs, In-Line at +4.3% Core YoY
Pre-market futures this morning — prior to the big Consumer Price Index (CPI) report — were down modestly, but have ratcheted down another peg on the release of this important data on inflation. The Dow went from -10 points to -83 points to -60 points in a manner of minutes, the S&P 500 moved from -1.5 points to -15 to -10, and the Nasdaq from -4 points to -60 points, where it has remained. These moves are a direct result of the reaction to CPI numbers for August.
Headline CPI came in as expected at +0.6%, much higher than the +0.2% reported for July. However, as we take out volatile fuel and food costs, the core CPI print is +0.3% — still a tad hotter than the +0.2% expected and reported a month ago. The last time CPI headline was higher than +0.6% was way back in February 2022. But it’s clear a hike in gasoline prices had a lot to do with this number.
Year over year, CPI reached +3.7% — again, 10 basis points (bps) higher than expected, and a half-point above the +3.2% reported for July. Core CPI year over year — perhaps the most important figure of them all — was in-line with expectations at +4.3%, and down 40 bps from the previous month’s read. Still, +4.3% core CPI is still more than double the Fed’s optimum inflation rate of +2%. That said, we’ve not seen a sub-4% number in this metric since May of 2021.
Under the hood, this is a better-looking report than he headlines might suggest: aside from Energy, which can fluctuate a lot month over month, prices for consumers look fairly well contained. Owner’s Equivalent Rent has come down, as have Food and Used Cars. Transportation was up +2%, but this may also be aligned with fuel costs. For a little perspective, September 2022 — almost exactly a year ago — we were at +6.6% on core CPI year over year, which were levels we hadn’t seen since runaway inflation of the early 1980s. Coming down 230 bps in a year on a sticky inflation metric is nothing to sneeze at.
Pre-market traders appear to be in agreement with this assessment: currently, both the Dow and S&P are flat, while the Nasdaq is currently down a scant -7 points minutes before the opening bell. The jury may still be out regarding what the Fed ultimately decides to do about interest rate levels a week from now, but this data is not screaming for another rate hike — at least not from this bird’s eye view.
Cracker Barrel Old Country Store (CBRL - Free Report) released fiscal Q4 earnings ahead of today’s open, with mixed results not damaging its share price in early trading (perhaps because the stock is -21% year to date). Earnings of $1.79 per share outpaced the Zacks consensus by 11 cents, while revenues of $836.7 million came up short of the $842.7 million forecast. Restaurant comps grew +2.4% on +8.7% menu pricing, while its Retail segment fell -6.8% year over year. Shares are up modestly on the news.
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