Some signs of progress in the Federal Reserve's fight against inflation are expected to be shown in Thursday's data. The moderation won't be enough to convince the central bank that it has succeeded in counteracting the most intense price increases in decades.
Overall inflation is projected to have risen 8.1 percent in the year through September, down slightly from the 8.3 percent in the year through August. That rate is very high. After stripping out fuel and food, the core index is likely to have increased by a small amount.
What happened between August and September will be watched more closely by Fed officials. The monthly data gives a clear picture of how prices are evolving in real time, while the annual numbers reflect what has happened cumulatively over the past year.
Some hopeful signs might be offered by those monthly figures. Overall inflation is expected to have risen 0.2 percent in September, which is faster than last month, but slower than this year. The core index rose in the previous month.
The pace is too fast for the Fed. The moderation would be an encouraging sign if the report shows that the slowdown will continue.
"This is the first in a line of reports that should show us what the Fed has been waiting to see for quite a while now, which is a steady deceleration in that core print."
Inflation is expected to moderate in the months ahead as supply chains heal, as used car prices fall, and as consumer demand slows. They expect the progress to be gradual as rents continue to rise.
Goldman's analysts expect monthly core C.P.I. inflation to stay close to its current level for the next couple of months and then fall to 0.2 percent or less next year. By the end of 2022, they think core inflation will be 6 percent, and by the end of next year it will be 2 percent.
It would be a marked improvement, but it would still be quick, and it would be hard to get inflation back to normal. The Personal Consumption Expenditures measure, which will not be released until late October, is the inflation gauge used by the Fed.
Because inflation has lingered for more than a year and a half, central bankers are likely to remain focused on fighting inflation. Peak inflation has been declared by economists many times, only to have those forecasts upended as inflation went up again.
The head fake is something they are aware of.
The Fed has raised rates five times this year, and officials are expected to debate an increase of a half-point or three-quarters of a point. It can take months or even years for monetary policy changes to have a noticeable impact on the economy.
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