The overall US inflation rate (YoY % Change) has moved down for the 6th consecutive month to 6.5%, its lowest level since October 2021. This is a positive development, suggesting that inflationary pressures are easing. The core inflation rate, which excludes volatile food and energy prices, also decreased to 5.7%, its lowest level since December 2021.
US Core CPI: 5.7%, est: 5.7%, prev: 6%
CPI MoM: -0.1%, est: -0.1%https://t.co/E9SOE2vSsi
— unusual_whales (@unusual_whales) January 12, 2023
The US Core Consumer Price Index (CPI) for December came in at 5.7%, meeting expectations. This is a slight decrease from the previous month’s reading of 6%. Additionally, the overall Consumer Price Index (CPI) for the month decreased by 0.1%, also in line with expectations.
Price changes over last year (CPI report)…
Fuel Oil: +41.5%
Gas Utilities: +19.3%
Transportation: +14.6%
Electricity: +14.3%
Food at home: +11.8%
Food away from home: +8.3%
Shelter: +7.5%
Overall CPI: +6.5%
New Cars: +5.9%
Medical Care: +4.1%
Gasoline: -1.5%
Used Cars: -8.8%— Charlie Bilello (@charliebilello) January 12, 2023
The Core CPI, which excludes volatile food and energy prices, is often considered a more reliable indicator of inflation as it provides a clearer picture of underlying price trends. The 5.7% reading suggests that inflation remains elevated, despite the slight decrease from the previous month. This can be attributed to the ongoing economic recovery and the Federal Reserve’s monetary stimulus measures.
Core inflation ran at a 3.14% annualized rate in the October-to-December period, the lowest such reading in 15 months
It was 4.55% on a six-month annualized basis, the lowest reading since May 2021 pic.twitter.com/QBBj9vh62h
— Nick Timiraos (@NickTimiraos) January 12, 2023
The small decrease in the overall CPI can be attributed to a decline in energy prices, which dropped by 3.3% in December. Food prices, on the other hand, increased by 1.5%. The decrease in the overall CPI is a positive sign as it suggests that inflationary pressures are starting to ease.
The overall US inflation rate (YoY % Change) moved down for the 6th consecutive month to 6.5%, its lowest level since October 2021. Core inflation moved down to 5.7%, its lowest level since December 2021. pic.twitter.com/RxxDa7Pz18
— Charlie Bilello (@charliebilello) January 12, 2023
The Federal Reserve has stated that it will tolerate higher inflation in the short term as it continues to support economic recovery. However, if inflation persists at high levels, it could lead to an increase in interest rates, which would have a negative impact on the economy. Therefore, it will be important to keep an eye on future inflation readings to see if the trend of easing inflationary pressures continues.
Effect of CPI numbers on the futures market
The release of the US Consumer Price Index (CPI) numbers can have a significant impact on the US futures market. The CPI numbers, which are released monthly, provide a measure of inflation and are closely watched by traders and investors.
When the CPI numbers come in higher than expected, it can signal that inflation is increasing, which can lead to a decrease in stock prices and an increase in bond prices. This is because higher inflation can lead to an increase in interest rates, which can make stocks less attractive to investors and bonds more attractive. This can lead to a decrease in the value of stock futures and an increase in the value of bond futures.
On the other hand, when the CPI numbers come in lower than expected, it can signal that inflation is decreasing, which can lead to an increase in stock prices and a decrease in bond prices. This is because lower inflation can lead to a decrease in interest rates, which can make stocks more attractive to investors and bonds less attractive. This can lead to an increase in the value of stock futures and a decrease in the value of bond futures.