Following the September Consumer Price Index (CPI) print, which showed consumer prices rose more than expected, Omair Sharif, Inflation Insights president, joins Seana Smith and Brad Smith on Morning Brief to break down what the fresh data signals about inflation and how it affects the Federal Reserve’s rate easing cycle.

“The number was a little bit hotter than expected,” Sharif says, but notes there is positive news within the data. “I would really zero in on the encouraging news today, which is that the one piece that we've been sort of, you know, the last shoe to drop we've really been waiting for was housing inflation. The last couple of months it was really elevated, even though I think we had been seeing a lot of relief in the first half of the year. Today it did finally cool down a bit more.”

“Admittedly, some things were hotter than expected today. But I think some of that stuff is more likely than not to just be a one off in this particular month,” he says.

Looking at sector-specific components of the data, Sharif says, “Food prices went up so much right after COVID. They've come down quite appreciably or at least flattened out quite appreciably in the last year. Energy generally had been coming off up until very recently. So I still think overall those are positive signs. Housing coming down would really just be a huge, huge help overall for the Fed.”

He notes, “Given that hot print today, even though I do think some of this stuff will reverse course pretty quickly, I think that's if you were thinking 50 bps [cut at the Fed’s November meeting] that's pretty much been wiped out at this stage… I think the Fed still wants to progress slowly here. So I think 25 [bps cut] is the base case for November.”

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This post was written by Naomi Buchanan