Our AI-Generated CPI Forecasts: Sept 2023

Inflation numbers, as measured by the Consumer Price Index (CPI), will be published tomorrow before market open. Stock market participants will monitor these figures very closely.

OdinUltra, our financial AI infrastructure, predicts headline inflation to be 3.68% YoY (+/-0.16%) for September 2023, an increase fueled mainly by energy. Our algorithms forecast core inflation to be 4.15% YoY (+/-0.12%) for September 2023, driven by a decrease in shelter, contributing to a deceleration of CPI.

Leveraging our high-frequency data, we model individual components of CPI in addition to the overall headline and core index. Our machines predict the energy component to continue to worsen to -1.02% YoY, contributing to the rise in headline inflation. Our models forecast the food component to improve to 3.86% YoY.

Our algorithms project the shelter component will continue to decline, settling at the level of 6.90% YoY, illustrating the year-over-year moderation in rents. Our machines forecast the medical care services component to continue to improve to -2.78% YoY.

Our models predict the transportation services component to ameliorate to 8.81% YoY. As the summer travel season is over, the upward pressure from airline fares eased, favorably impacting transportation services pricing. Our algorithms predict transportation commodities will reach -0.39% YoY. Used car prices went down amidst better new car inventory and sales strength, however sales volume declined compared to last month mainly due to fewer selling days. New car prices also cooled amidst higher interest rates and price cuts performed in luxury and electric vehicles segment.

Equity markets went up eleven out of the past twelve CPI releases. Average absolute moves for the S&P 500 and NASDAQ 100 were 1.12% and 1.58%, respectively.