U.S. headline inflation likely fell for a third consecutive month in September as oil prices dropped (by 8.6% month-over-month). Gasoline prices were up more than 16% from a year ago, easing down from a 26% year-over-year jump in August.
While headline inflation began its descent in June, food price growth has kept climbing—hitting a new multi-decade high in August. And core price growth (excluding food & energy products) likely ticked higher in September, reflecting price pressures that remain very broad. Indeed, while wholesale used vehicle prices fell in September, shelter costs have exhibited considerable and persistent strength.
We expect underlying price growth to slow more sustainably. But this will play out amid a weaker economy with higher unemployment rate as the U.S. Federal Reserve continues to hike interest rates aggressively.
Week ahead data watch:
- U.S. retail sales likely trended up in September (+0.2%), with higher sales of motor vehicles and parts offsetting a price-led drop in sales at gasoline stations.
- Statistics Canada’s flash estimate for August manufacturing sales indicated a 1.8% decline. Roughly half of that is likely explained by a drop in prices led by petroleum products.
- Canadian wholesale trade likely rose 0.8% in August, due to higher sales of food, beverage, and tobacco items, thanks to continued food and beverage product inflation.
