Citi projects the core Consumer Price Index (CPI) to increase by 0.31% month-on-month, noting a slowdown in underlying inflation. They anticipate that inflation in services and shelter will decelerate, with core goods categories affected by tariffs showing more strength.
Deutsche forecasts a core CPI rise of 0.32% month-on-month, observing ongoing tariff impacts on core goods categories. They expect strong inflation in these areas, potentially extending to apparel.
Goldman Sachs Core CPI Estimate
Goldman Sachs estimates a 0.36% increase in core CPI month-on-month, attributing upward pressure from tariffs on communication, household furnishings, and recreation, adding 0.14% to core inflation. They predict headline inflation at 0.37% due to higher food and energy prices.
ING anticipates a core CPI increase of 0.3% month-on-month, with goods price inflation driven by tariffs. They highlight that core goods constitute 19% of the inflation basket, while housing costs, representing 33%, may reflect softening rents.
Nomura expects core CPI to rise by 0.34% month-on-month, with core goods inflation contributing 0.48%, marking the fastest increase since June 2022. They foresee strong non-auto goods price inflation due to tariffs.
Wells Fargo predicts a 0.29% rise in core CPI month-on-month, with sticky services inflation and a rebound in goods prices. They see core goods and services inflation increasing due to factors like new vehicle prices and travel-related services.
Tariff Impact on Goods Prices
With expectations for today’s August 2025 Core CPI clustering around +0.3%, we are positioning for a number driven almost entirely by a rebound in goods prices. This follows the White House’s confirmation in late July 2025 of new 15% tariffs on a range of consumer electronics and apparel. The key focus will be on how much these tariffs have pushed up prices in categories like communication and household furnishings.
Beneath the surface, however, the underlying trend appears to be cooling, especially in services and shelter. Recent data for August 2025 from Zillow and Apartment List showed a continued slowdown in national rent growth, which should eventually pull down the official shelter inflation component. This creates a conflict between the tariff-induced spike in goods and the softening of more persistent inflation sources.
This dynamic suggests a hawkish short-term reaction from the Federal Reserve, which will likely focus on the headline figures. Following Fed Chair Powell’s comments at the Jackson Hole symposium in late August 2025 about remaining vigilant, derivative traders should consider positions that benefit from a spike in front-end rate volatility. Options on SOFR futures could be an effective way to play any overreaction to today’s print.
The August jobs report, which showed payrolls growth slowing to 150,000, suggests the broader economy is already cooling, making a sustained hawkish path difficult. Therefore, a yield curve flattener trade, which bets on short-term rates rising more than long-term rates, looks attractive over the coming weeks. This would reflect the market pricing in a near-term Fed response to the tariff inflation while still anticipating a weaker economy down the line.
We also see opportunities in equity derivatives, specifically in sectors most exposed to the new tariffs. Given the expected pressure on corporate margins in consumer discretionary and tech hardware sectors, buying puts on relevant sector ETFs offers a good hedge. This is especially true for companies that have shown less ability to pass on rising input costs to consumers over the past year.
