CPI at consensus. Virtually the entire monthly gain was just five items out of hundreds -- in the lead, of course, owner's equivalent rent, which was upwardly weighted in the new weighting scheme. Core ex-OER grew at a mere 3.1% on an annual rate in January.
What you're not hearing about today's CPI
Tuesday, February 14, 2023
The uptick in core services ex-OER kills the one-and-done scenario.
Update to Strategic View
Core goods inflation is new below the Fed's target, but shelter continues to make new highs, but Powell is willing to look through that. Powell will focus on core services ex-shelter, which peaked in September but has fallen little, and upticked slightly in January. This means the Fed's February rate hike will not be one-and-done as we had believed, although there is one more CPI report before the FOMC meets in March. So-called revisions to 2022 make Q4 look worse, but Q2 look better -- which throws into question the Fed's whole scorched-earth program. Reweighting of items in the consumption basket set up for a more-rapid decline this year as housing cools. But for now, the reweightings make matters worse: without them, January's 50 bp inflation would have been 4 bp. CPI and other measures are still solidly on track to hit the Fed's target by summer.