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What's going on, guys? It is Thursday, September 12th, and today we are talking CPI.

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All right, friends, well, August inflation data came in, and it came in slightly above expectations,

adding complications to next week's Fed rates decision.

Headline CPI rose 0.2% for the month, the same as July, and broadly in line with inflation targets.

This brought the 12-month headline

inflation rate down to 2.5%, which is a significant reduction from the 2.9% reading in July,

and the lowest level since February 2021. We've now had four months in a row where headline

inflation looks fairly under control. Monthly figures suggest it's still running above 2%,

but not by much. The problem was

in core CPI, which strips out food and energy costs. The core reading came in at 0.3% for the month,

which was slightly above expectations. This puts 12-month core inflation at 3.2%, which is the same as

last month, and which shows signs of stickiness. The Fed doesn't use

the raw CPI data to guide their decision-making. Instead, they use PCE inflation, which uses

CPI figures as an input. PCE inflation is typically around 0.4 percentage points below CPI inflation,

so we're still close to target, but progress seems to have stalled out.

Seema Shaw, chief global strategist at Principal Asset Management said, this isn't the CPI report the market wanted to see. With core inflation coming in higher than expected, the Fed's path to a 50-bases

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