CPI Up +0.4, Core-CPI Up +0.1%

August’s CPI and Core-CPI were up +0.4% and +0.1%, respectively.  This compares to a consensus estimate of +0.4% for the headline and +0.1% for the core number.  August’s headline number faced some pressure from increasing fuel costs (+4.6%) during the month that were partially offset by a much smaller increase in food prices.  The pricing indices will remain a closely watch indicator as many investors are fearful that excessive liquidity in the market could lead to significant inflation pressure in the future.  Personally, I can see their point, but believe we’re still ways away from experiencing any real inflationary threat.  Much of the liquidity placed into the market by the fed is making up for lost credit growth, which will take some time to recover.  I don’t anticipate the fed will start debating on taking away the punch pull until at least the latter half of next year.  But, with that said, the fed would react in the unlikely scenario of a sudden and severe uptick in inflation or inflation expectations.  Nevertheless, gold prices have continued to rallying indicating some investors are likely fearful over near-term prices in the US.

CPI Data from BLS: