**As seen in Risk In The Week report 02/09/24, subscribe at cablefxm.co.uk/reports
U.S. consumer prices accelerated by 3.4% Y/y in December, this was faster than the prior figure of 3.1% and the consensus of 3.2%. The core metric eased to 3.9% from 4.0%, the reading was higher than the consensus estimate of 3.8%. The BLS recently released revisions showed the December headline rising 0.2% M/m, this is 10bps slower than the previous estimate. The 4Q core CPI revision left the rate unchanged at an annualized increase of 3.3%.
The desk at ING noted that the CPI metric has been posting faster month-over-month readings than the core PCE, they said this is due to the CPI’s heaving weighting of housing and vehicles in the basket calculations. ING warned that while rents are easing in the open market, the BLS calculation lags the underlying and the index will take time to reflect the slowdown. ING expects January core CPI to rise 0.3% M/m and added that risks are skewed towards 0.2%. While the consumer price index is not the Fed’s preferred (or only) measure of inflation, economists at Natixis point to U.S. services ex-rent prices rising at 3.7%, which shows that inflation is still high. Natixis warned that the metric has not fallen over the last couple of months, this is relevant as it is a leading indicator of wage inflation.
The median projection sees U.S. headline prices rising by 2.7% in 2024, according to data compiled by Bloomberg.
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