TD Securities economists Oscar Munoz, Eli Nir, Gennadiy Goldberg, and Molly Brooks anticipate that August's Core Consumer Price Index (CPI) will rise by 0.19% month-over-month, with services driving the increase and core goods offsetting the gains due to a modest decline in prices [1]. The team projects Core CPI at 2.3% year-over-year, a decrease of 10 basis points compared to July, while Headline CPI is expected to remain steady at 3.4% year-over-year [1]. Risks to these forecasts are considered skewed to the upside, as the economists are assuming significant price declines in tariff-sensitive goods categories [1].
Goods prices are expected to resume declines in August after a 0.20% increase in the previous report, with the core goods ex-vehicles segment (particularly tariff-related items) likely seeing a 0.15% month-over-month drop. Key drivers of this decline include household goods and apparel, while new vehicle prices are anticipated to contribute to inflation for a second consecutive month [1].
The services segment is forecasted to strengthen in August, with a 0.26% month-over-month increase, supported by firmer shelter inflation and gains in vehicle maintenance, hospital, and recreation services. Airfares are projected to climb 3.2% month-over-month, up a full percentage point from July [1].
Looking ahead, TD Securities expects core inflation to continue evolving positively through October after peaking at 2.9% year-over-year in May. Headline inflation, which likely saw its annual peak at 4.2% in May, is expected to remain stable, though its trajectory will depend on the resolution of the Middle East conflict. Both core and headline inflation are anticipated to regain year-over-year momentum in the fourth quarter [1].
CONCLUSION
TD Securities projects that US core inflation remains contained in August, with services driving gains and goods prices softening. While headline inflation is steady, risks are skewed higher due to tariff-sensitive goods, and both core and headline inflation are expected to pick up momentum later in the year. The market takeaway is a cautiously optimistic outlook for inflation trends, with attention to geopolitical developments.