Understanding today’s CPI surprise

We produce inflation nowcasts at a disaggregated level using a model that produces highly accurate projections. As we have shown in earlier posts, many categories experience high volatility and are measured with a degree of measurement error, so we provide detailed immediate reports that help our clients understand the implications of forecast errors for the inflation outlook, policy decisions and asset prices. Codera’s forecast for August was slightly lower than most economists, and the table below provides an excerpt of our report, showing today’s lower than expected CPI outturn reflected lower than expected food prices.

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