Economists predict that despite price pressures on certain categories of goods including used cars, key inflation indicators are expected to decelerate in September.

According to estimates from economists surveyed by institutions, the Consumer Price Index and the core indicators, excluding food and energy, may have risen by 0.1% and 0.2% respectively last month. In both cases, the monthly increases will be lower than in August.

On a year-on-year basis, the overall indicators are expected to increase by 2.3%, the slowest growth since early 2021. Core indicators are expected to rise year-on-year for the second consecutive month at 3.2%.

If the data meets the general market expectations, it is unlikely to have a significant impact on the Fed's next policy decision in November.

"Even if core CPI exceeds expectations, we do not believe that the September report will change the Federal Open Market Committee's view on the downward trend in inflation," economist Anna Wong wrote in a report on Thursday. She expects a 25 basis point rate cut in November following a 50 basis point cut in the previous month by the Federal Open Market Committee.

Here are more details to look out for in the CPI report scheduled for release on Thursday:

Commodity prices

Most forecasting institutions predict that after several months of decline, used car prices will rebound. This will put pressure on core commodities, which have experienced price declines in 14 out of the past 15 months.

Economists at Pantheon Macroeconomics suggest that looking ahead, the rise in container transportation prices may affect this category.

"Transportation costs have a lagging impact on CPI - at least six months," wrote Samuel Tombs and Oliver Allen. "Therefore, in the coming months, the impact of the nearly doubled container freight rates earlier this year may seep into the prices of core CPI commodities."

PCE effects

The increase in used car prices is bad news for consumers, especially in the face of persistently high car insurance prices. However, this will not have a significant impact on the inflation indicators favored by the Federal Reserve, such as the Personal Consumption Expenditures Price Index. The index has been approaching the Fed's 2% target.

"Used cars have a relatively low weight in core PCE, so their accelerated rise has a small impact on PCE," wrote Morgan Stanley economists Diego Anzoategui and others last week. "Used cars account for about 2% in the CPI basket and 1.2% in the PCE basket."

Strong wages

Economists point out another upside inflation risk from wages, which are the primary engine driving consumer spending. Real wages in August saw the largest year-on-year increase in a year. There may be further pressure ahead after nearly 50,000 dockworkers negotiated significantly higher wages and with 33,000 Boeing employees currently on strike seeking negotiations for a wage agreement.

Citigroup economists Veronica Clark and Andrew Hollenhorst wrote in a report on Tuesday that the continued strength in wage levels will pose a significant upward risk to inflation, especially in areas such as medical care services.