United States-110762260

1Michael Feroli (1-212) 834-5523michael.e.feroli@jpmorgan.comJPMorgan Chase Bank NAAbiel Reinhart (1-212) 270 4058abiel.reinhart@jpmchase.comJPMorgan Chase Bank NAMurat Tasci (1-212) 622-0288murat.tasci@jpmchase.comJ.P. Morgan Securities LLCNorth America Economic Research11 October 2024J P M O R G A NThe highlight of the coming week will be Thursday’s retail sales report. Retail spending perked up early in June and has since exhibited steadier, modest growth as the summer pro-gressed. In next week’s report we expect a continuation of this late summer trend, and we look for a 0.4% increase in overall outlays and a 0.2% increase in the core “control” mea-sure. Inflation firms in SeptemberThe September consumer price index (CPI) rose 0.2%m/m, a bit above our and consensus expectations. Meanwhile core rising 0.3%m/m was broadly in line with our forecast, although there were some unexpected sources of strength (and weakness) within the details. With these numbers, year-ago headline inflation eased slightly to 2.4% (a more than three-year low), while core CPI inflation ticked up to 3.3% after plateauing at 3.2% for a few months (Figure 1). -202468101516171819202122232425%, saarFigure 1: Core CPI run ratesSource: BLS, J.P. MorganOver 6monthsOver 3monthsOver 12monthsWithin the core, goods prices rose nearly 0.2% on the month but remain 1.0% lower against year-ago levels; the three-month annualized run rate improved to -1.2%, which still suggests ongoing disinflationary pressure. Core services pric-es increased 0.4% again last month and are running at 4.7%oya. The three-month annualized pace for core services has rebounded to 3.8% after coming off sharply in prior months, but is still below where it was this time last year and well below its early 2024 pace.Looking at the core details, shelter inflation surprised lower with a 0.2% monthly rise. Both owners’ equivalent rent (OER) and tenants’ rent eased to a 0.3% monthly pace, with the former up 0.28% and the latter 0.33% to two decimals. We expect these rental inflation components to decelerate only gradually. Lodging away from home also was much weaker than expected, sliding -1.9% in September after a 1.8% pop in August. This component is very volatile, and high-frequency industry data had flagged a rise last month. Against these soft measures, several components of core CPI were firmer than expected in September. Apparel prices rose •September inflation measures firmed up and should put core PCE inflation at 2.6%oya last month•Hurricane noise is distorting, and will continue to dis-tort, the signal from jobless claims•Fed minutes indicate 25bp and 50bp cut debated last month; Fed speakers point to 25bp going forward•Next week’s September retail sales report expected to point to modest spending growth last monthAfter a summertime cooling in inflation, the September CPI warmed up some. The headline CPI rose 0.2% last month, though the year-ago measure eased to a cycle low of 2.4%. The core measure was up