US CPI/PPI

US CPI/PPI
Tuesday, March 12, 2024
It's mostly about gasoline (one-off) and owners' equivalent rent (as usual). Our favorite inflation measure, core ex-OER, is now below the Fed's target for six months on a year-on-year basis. Powell's "supercore" fell from 5.13% to 5.02% at an annual rate, and decelerated on a monthly basis. 
US CPI/PPI
Tuesday, February 13, 2024
A huge miss. We're disappointed, markets are disappointed (even though markets were expecting less than we were to begin with). Housing is a big culprit -- it's high and accelerating, and as of this year's new weightings announced today it has a bigger influence (it's also the most ridiculously laggy component). We still get one more CPI before the March FOMC, but at this point hard to see how it could be good enough to drive the first rate cut then.
US CPI/PPI
Thursday, January 11, 2024
We're not going to say this hotter-than-consensus CPI print wasn't disappointing. It was also probably wrong, contradicted by the real-time Truflation measure, and our own similar model, which both pointed so slight deflation on the month. More than a third of the headline inflation for December was owner's equivalent rent of primary residences, which includes data as much as two years stale. So far markets have taken out about 10 bp of probability for a rate cut in March. We get two more bites at this apple -- two CPI reports to go before the March FOMC. Nothing in this single month of data changes anything.
US CPI/PPI
Tuesday, December 12, 2023
A mixed bag in CPI this morning -- the FOMC tomorrow will be able to project whatever it wishes into it. Goods, half that basket, are in downright year-on-year deflation. And most categories are decelerating. But Powell's super-secret private index, core services ex-shelter, a minority of the basket (but the one he focuses on), is accelerating (thanks to the methodological change in the calculation of medical services, which have an even larger weight in PCE than in CPI). This is not the clarion call warning of deflation that we had expected and hoped for. We'll have to wait another month for that -- nothing in this changes our expectations. 
US CPI/PPI
Tuesday, November 14, 2023
It's all going according to plan. CPI ex-OER at 1.71% YOY -- and negative 0.25% on the month! Core ex-OER at 2.35% YOY. Now if only the Fed could look at the facts instead of its obsolete models.
US CPI/PPI
Thursday, October 12, 2023
OK everybody, calm down (that means you, Jay). Core CPI ex-OER (the only true measure of the actual inflation signal) is at 2.4% year-on-year, below the Fed's target of 2.5%. Month-on-month it's just 2.14%. Three-month annual just 1.41%. We win. Be happy.
US CPI/PPI
Wednesday, September 13, 2023
As the markets expected, energy jolted August headline CPI higher -- prices in that sector alone grew 92% at an annual rate. But that's an outlier. Core inflation has grown only 2.4% over the last three months at an annual rate. We're at the Fed's target in the measure Powell says is more important than headline. 
US CPI/PPI
Thursday, August 10, 2023
CPI year-over-year beats expectations, but rises because an anomalous year-ago comparable of zero rolls off. It’s all OER. Without it, CPI was almost unchanged on the month. Core excluding OER, the best measure of the true inflation signal, outright deflated on the month, and is now at a mere 3% year-on-year.
US CPI/PPI
Wednesday, July 12, 2023
CPI beats our already dovish expectations -- unrounded, CPI printed at 2.97% year-on-year, which is 93% back to the Fed's target in just 12 months since June's peak. Core fell too, to 4.8% year-on-year, and even lower at 3.2% month-on-month. Our favorite measure, Core ex-OER, actually deflated on the month. The Fed simply has to "skip" again. 
US CPI/PPI
Tuesday, June 13, 2023
CPI excluding OER is at 2.7% YOY, just 20 bp from the Fed's target for it. OER is once again the hottest single category, but at 8% YOY we've just printed the first sequential decline since this inflation cycle began. Sure, Powell can gripe that his pet "core services ex-housing" index is still at 5.25% YOY, but that's the lowest in the year since he first panicked about suddenly non-transitory inflation (just when it was becoming transitory, by the way). If today's data can't stay the Fed's hand, then they are officially delusional.  Update (June 14) -- PPI is in collapse, with final demand at a mere 1.2% year-on-year, and almost all sub-categories in outright deflation. Remember: PPI is the gateway drug to CPI. Deflation is coming.

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