Posted BY: Zero Hedge

As we noted in our preview last night, so confident was Wall Street that today’s CPI print would be a miss – driven ostensibly by a plunge in energy prices – that the Y/Y whisper dropped as low as mid/sub 7%, with Goldman saying the “Headline number most likely shows some disinflation and won’t impact mkt meaningfully after tape’s recent run higher, unless shockingly cool…call it sub 7%…then keep your rally caps on” and JPM piling on that “a 7-handle CPI YoY we would likely to see a strong rally tomorrow.

In retrospect, pretty much everyone was wrong, with headline CPI coming in at a “shocking”, red hot 8.3%…

.. a number that 47 of 50 economists missed, and which just BMO (and two other smallish banks, SMBC Nikko and Berliner Sparkasse) predicted correctly:

  • BMO 8.3%
  • HSBC 8.2%
  • BofA 8.2%
  • ING 8.2%
  • JPMorgan 8.1%
  • Soc Gen 8.1%
  • Citi 8%
  • Goldman 8%
  • TD 8%
  • BNP 8%
  • Jefferies 8%
  • Standard Chartered 8%
  • Stifel 8%
  • Nomura 8%
  • Wells Fargo 7.9%
  • Credit Suisse 7.9%
  • Morgan Stanley 7.9%

Where did the surprises come from? Well, developments in food and energy prices came with few surprises. Energy prices fell 5.0% M/M…

… with gasoline prices down 10.5%, and food prices rising 0.8%. Both numbers were in line with expectations.

Trending: What Ominous Event Do They Have Planned for September 24th?

The prints for both core goods and core services were stronger than anticipated, however: core CPI rose 0.6% mom versus the consensus expectation of a 0.3% rise, and the joy rate rose to 6.3% from 5.9% previously, as consumers seemingly shifted purchases away from cheaper staples (lower gas prices) to discretionary goods, lifting prices in the process.

Core commodities prices surged 0.5% on gains in a number of categories including apparel (0.2%), new vehicles (0.8%), medical care commodities (0.2%), and alcoholic beverages (0.4%); most on Wall Street had expected a small decline in apparel and a smaller increase in new car prices which unexpectedly increased sharply.

At the same time, used car prices fell 0.1% on the month, though this decline was less than what most had forecasted, based on the large declines observed in wholesale prices recently.

Discussing the inflation report, BofA said that its “outlook for inflation includes moderation in the rate of increase in core goods prices through year-end and stable goods prices in 2023. This month, however, strength in core goods prices came as a surprise and suggests that further easing of supply chain pressures and inventory rebuilding, particularly in autos, is needed before good price pressures can moderate.”

Meanwhile, core services also came in hotter than expected, at 0.6%: the surprise came in transportation services, which rose 0.5% against (vs an outlook for a 0.5% decline). While airline fares did drop 4.6%, other transportation costs surprised the high side.

Elsewhere, medical care services rose 0.8% on a 0.7% gain in hospital services, while health insurance soared by a whopping 24.3% Y/Y (and up 2.4% on the month) making some wonder “rhetorically” if Obamacare wasn’t quietly and retroactively renamed to the Unaffordable Care Act.

Read more