"It's troubling that so many basic necessities are rising in price again: Food, gas, clothing and shelter all had big cost jumps in August. And this is only the beginning."
"The tariff boost will be fleeting, but weakening services inflation will only be resolved by looser monetary policy,"
"We continue to think, therefore, that the [Fed] will reduce rates by [1.5 percentage points] over the next 12 months, with [half] of that easing coming by the end of this year."
Tariffs were chiefly responsible for the August core CPI rise to 3.11 percent, with only about one-third of the eventual tariff impact passed to consumers so far. Basic necessities such as food, gas, clothing and shelter experienced significant price jumps in August, straining middle-class budgets. Pantheon forecasts core PCE to peak between 3.25 and 3.5 percent near year-end as retailers pass more tariff costs to consumers. The tariff-driven boost to inflation is expected to be temporary, while weakening services inflation will require looser monetary policy. Market pricing shows elevated odds of substantial Fed rate cuts this year, though near-term cut odds remain low.
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