Global inflation watch: Muted momentum outside of energy

Danske Research Team Danske Bank A/S

Overview: Inflation in August came in broadly as expected in both the US and euro area. Momentum in underlying inflation remained muted on both sides of the Atlantic (see chart). Rising energy prices, particularly European gas futures, have moved up near-term inflation expectations.

Inflation expectations: Short-term inflation expectations have moved higher the past month, while longer-term expectations remain anchored. Survey-based inflation expectations have declined slightly.

US: Headline CPI rose 0.4% m/m SA, as expected, up from 0.1% in July, mainly driven by higher energy prices. Core CPI came in slightly above expectations at 0.29% m/m SA (consensus at 0.2%, Danske Bank at 0.24%, July 0.22%). The upside surprise in core services was driven by a one-off rise in telephone services prices. Excluding this component, core inflation would have been in line with our forecast. Underlying inflation did not look particularly hot.

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Danske Research Team

Danske Bank A/S

Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.

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