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Following last month's modest miss in CPI which sparked speculation about a 50bps cut, which was then boosted by the jobs report miss and the huge downward revision, moments ago the BLS reported that – as only a handful of Wall Street strategists warned – CPI actually came in hotter than expected at the core level, rising 0.3% MoM vs expectations of a 0.2% print, with all remaining metrics coming in line, to wit:

• CPI 0.2% MoM (or 0.187% unrounded), Exp. 0.2% – in line
• CPI Core 0.3% MoM (or 0.281% unrounded), Exp. 0.2% – hotter than expected
• CPI 2.5% YoY, Exp. 2.5% – in line
• CPI Core 3.2% YoY, Exp. 3.2% – in line

And visually, here is the headline print, where the annual CPI increase dropped to just 2.5% from 2.9%, the lowest since February 2021…

… and the core….

…. as goods deflation is stalling and may even print positive in the coming months, while core service inflation remains the biggest driver.

That was s the 51st straight month of MoM increases in Core CPI, and a new record high.

Under the hood, used car prices fell 1.0%, moderating from last month's 2.3% drop, while airline fares jumped 3.9%, a big reversal to last month's bizarre -1.2% drop. Car insurance costs jumped another 0.6%, after rising 1.2%; furniture prices dropped 0.3% reversing last month's 0.3% rise.

Developing