UBS Economics-US Economic Perspectives _August CPI Preview Similar to las...-117630468

ab4 September 2025Global ResearchUS Economic PerspectivesAugust CPI Preview: Similar to last month Another strong, but not booming, month as tariffs keep pressure on
Tariff effects have been evident in recent CPI releases as monthly not-seasonally-adjusted price increases for core non-transportation goods have moved to the top of their non-pandemic range in each of the past three months, and 12-month aggregate inflation measures have increased nearly 40bp from the post-pandemic lows they hit in April. We expect the August CPI release (published next Thursday, September 11) will continue this trend with another somewhat elevated monthly core CPI increase and 12-month inflation edging up.
As of publication time we have not yet received the Adobe Digital Price Index for August, which will be important to gauge the pass-through of tariff effects. Incorporating that data into our forecast could alter our projection of the August CPI increase for the components of food at home and core goods, as well as the main headline and core CPI aggregates.
In the next couple of days we also expect to receive data on August airfares, consumer services output price diffusion index for August, and September used vehicle prices. Headline CPI: UBS US Econ 0.36%, UBS Nowcast 0.31%, consensus 0.29%
We project the CPI rose 36bp seasonally-adjusted in August, above the pace of the past six months as prices for energy, food, and core goods and services all show strong increases.
Our August headline CPI forecast of +36 bp is above the projection from the models of our Nowcasting team (31bp) and further above the current Bloomberg consensus average forecast (29bp). In contrast, our projected not-seasonally-adjusted headline CPI level, at 323.962, is closer to CPI swaps fixings in recent days. We think it is likely that the Bloomberg consensus average will gradually increase as it incorporates later reporters.
Not-seasonally-adjusted gasoline prices have been little changed in recent weeks, suggesting around a 1½% increase on a seasonally-adjusted basis.
Food prices are looking to have bounced back sharply from their decline in last month's CPI. However, averaging across the two months, which probably makes sense, would not suggest a change in the recent trend.
We project 12-month headline CPI inflation to rise to 2.91% in August from 2.70% in July and a post-pandemic low of 2.31% in April.Core CPI: UBS US Econ 0.31%, UBS Nowcast 0.33%, consensus 0.30%
We project the August core CPI will show a 31bp seasonally adjusted increase, which would be little changed from the 32bp increase in July and would also be similar to the June increase after accounting for issues with seasonal adjustment. We do not expect seasonal adjustment issues will notably distort the published August core CPI.
The not-seasonally-adjusted core CPI August increase is expected to be only a few basis points above the increase last year, which was at the top of the range of increases in non-pandemic year