❗️U.S. December Inflation Brief
- Rosbel Durán
- Jan 11, 2022
- 2 min read
**As seen in Risk In The Week Report 01/07/2022, susbcribe at cablefxm.co.uk/reports
November Figures:
All November CPI components rise on a M/M basis, gasoline and commodities accelerated the most as we have seen for the last couple of months (Gasoline +6.1%, fuel oil +3.5% M/M). However, energy services and electricity bottom the November basket, both rise at 0.3% M/M, medical commodities expanded the least at 0.1% M/M
Used cars expand at 2.5% M/M, unchanged from previous month. New cars rise 1.1% M/M. The shelter component rises by 0.5% M/M, unchanged from previous month.
Data Surprise:
U.S. Y/Y headline inflation is expected to accelerate from 6.2% to 6.8%, according to data compiled by Bloomberg. We have not seen a miss in this figure since the January print, actual came at 1.4% vs. estimates of 1.5% Y/Y. CPI coming at 1.4% Y/Y feels like a decade ago
Last month, the headline beat consensus forecasts at 6.2%, this was a 0.3%pp beat or a 2-standard deviation surprise (five year data). October was the largest beat in headline inflation since June's 3-standard deviation surprise
For November to match the magnitude of October's beat, headline CPI would have to come at 7.1%, anywhere below this would signal high inflation but still close to the survey median.
Risk In The Week, U.S. Dec. CPI:
According to Fed chair Powell, it was October’s data print that led the Fed to reconsider its ‘transitory’ approach. The November core print came at 4.9% Y/Y, the highest seen since 1991.
Strategists at Nordea see the headline and core coming at 7.1% and 5.4%, respectively. The Finnish bank points to a continuation of the previous inflation drivers playing in the December figure, vehicle prices rising, higher shelter costs, and the strong labour market contributing to wage growth. However, Nordea sees base effects dragging down the figure ahead this year.
As of now, the U.S. holds the widest differential of actual inflation - central bank target (3.7%). The U.K., Canada, and New Zealand overshooting is far less than the U.S., still, these central banks hold a more aggressive tightening pricing via OIS markets
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