US CPI/PPI - 2023-06-12

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.