US CPI Data
According to data issued on Thursday by the US Bureau of Labor Statistics, annual Core CPI jumped to 6.6% in September from 6.3% in August. This was the highest Core reading in 40 years, indicating that the majority of inflation came from areas other than food and energy.
Furthermore, the inflation components of the Michigan Consumer Sentiment Index were higher in September than in August. The 1-year Consumer Inflation Expectation for October rose to 5.1% from 4.7% the previous month. Moreover, the 5-Year Consumer Inflation Expectation for October climbed from 2.7% in September to 2.9% in October.
The UK’s August CPI data of 9.9% YoY, which brought it back under double digits, will be this week’s most eagerly awaited CPI reading. The Core reading increased slightly to 6.4% YoY in September, with the September reading projected to be 10% YoY. The Bank of England won’t meet again until November 3rd, so this will be a fascinating reading for them.
To prevent the economy from falling, BOE has been buying Gilts and this was already over last Friday. During the previous meeting, the bank announced that it would start selling its assets, but this was actually moved to October 31. BOU must raise rates because inflation is getting close to 10%. The question now is, how much are they going to raise rates to combat inflation?
New Zealand CPI
New Zealand will release its Q3 inflation data on Tuesday which is anticipated to have decreased from 7.3% to 6.6%. From the perspective of Reserve Bank of New Zealand (RBNZ) policymakers, a decline of 70 bps is enticing. If this happens, it will support the argument that the RBNZ should slow down the pace of rate hikes.