🇺🇸❗️Cable FX Macro Weekly Note: U.S. January Consumer Prices

**As seen in Risk In The Week report 02/10/23, cablefxm.co.uk/reports

U.S. December headline prices slowed to 6.5% Y/y from the prior 7.1%, the release came in line with expectations and marked the sixth consecutive month of slowdown in the figure. The core print eased to 5.7% Y/y from a prior 6.0%, this was also in line with the median survey. The headline monthly change showed the first contraction since 2020, however, the release was recently revised to a rise of 0.1% M/m, the same is seen in the core figure and feeds into the idea that inflation is rising faster than previously thought. U.S. Core CPI printed at a revised rate of 0.4% M/m, up from a preliminary 0.3%. The readings come to bring colour during a key moment for FOMC policymaking as rate hikes ease to a slower pace, but there is still uncertainty on how many of these will still be needed and for how long will rates stay there. Analysts at Nordea say that the Fed is closer to its peak rate than the ECB, however, central banks will remain determined to continue hiking to whatever levels are needed to ensure inflation returns to target. Nordea thinks underlying inflation may not return quickly to 2%, and add that central bank pricing holds upside risks. Wells Fargo analysts see a faster pace of price growth in January on the back of a rise in gasoline prices and an uptick in used car prices. They expect headline prices falling to 6.2%, and note that if prices print in line, this would be the slowest rate since October 2021.