Cool CPI Print Validates Our Dovish View On Inflation

2025-01-16 03:20:00 ET

Summary

• US Core CPI printed cool at .2% versus .3%.
• Headline inflation was higher than core due to seasonal adjustment of gasoline prices and higher nat gas prices resulting from colder-than-normal weather.
• The CPI and PPI prints imply that PCE Core will come in at a cool .2% when it is reported at month end.

Core CPI printed cool at .2% versus .3%, with headline higher than core due to seasonal adjustment of gasoline prices and higher natural gas prices resulting from colder-than-normal weather. Medical care services cooled from .3% to from .1%, used cars and trucks dropped from 2% to 1.2%, and vehicle maintenance and insurance continue to cool from its blistering 7.3% Y/Y increase. Surprisingly, rent and owners’ equivalent rent ticked up to .3% from .2% last month , despite ongoing declines in market-based measures of rents....

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