iM Securities said on the 12th that although U.S. inflation data came in higher than expected, the likelihood of a recession such as stagflation (a recession accompanied by rising prices) is low.
According to the U.S. Department of Labor on the 11th (local time), the August consumer price index (CPI) rose 0.4% from the previous month. It topped market expectations by 0.1 percentage point, but increased 2.9% from a year earlier, in line with forecasts. The core CPI, which excludes food and energy, also matched expectations, rising 0.3% from the previous month and 3.1% from a year earlier.
Park Sang-hyun, a researcher at iM Securities, said, "It is somewhat disappointing that the increase in consumer prices widened slightly compared with July," but added, "However, clear signs that tariff-driven inflationary pressures are spreading have not emerged, which gave relief to financial markets."
Park noted that the super core CPI (core inflation excluding highly volatile items such as food, energy, and shelter), which the U.S. Federal Reserve (Fed) focuses on, saw its month-over-month gain ease slightly, from 0.48% in July to 0.33% in August.
He said, "Consumer prices are continuing a flat trend that is neither surging nor sharply slowing," adding, "Given that the negative impact of tariff-driven inflation is limited and considering recent oil prices and labor market trends, there is a high probability that the increase in September consumer prices will slow," judging that this diverges from stagflation raised by some.
However, labor indicators have been weak in succession. Initial weekly jobless claims, a leading indicator for the labor market, came in at 260,000 last week, far above market expectations. It was the highest since October 2021.
Accordingly, the Federal Reserve's policy scale is expected to tilt toward employment. The probability that rate cuts totaling 75 basis points will be implemented by the December FOMC meeting has surged to 75%.
Park said, "The successive weakness in labor indicators will have a significant impact on the Fed's rate policy," adding, "It increases the likelihood of a rate cut in September as well as a total of three cuts by year-end."