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Consumer Price Index:Historical Releases/2023 January: Difference between revisions
Consumer Price Index:Historical Releases/2023 January (view source)
Revision as of 18:14, 14 February 2023
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'''Biggest Contributors:''' | '''Biggest Contributors:''' | ||
[[Consumer Price Index#Weighing of CPI components|Weighing of CPI components]] | |||
The index for shelter was by far the largest contributor to the monthly all items increase, accounting for nearly half of the monthly all items increase, with the indexes for food, gasoline, and natural gas also contributing. | The index for shelter was by far the largest contributor to the monthly all items increase, accounting for nearly half of the monthly all items increase, with the indexes for food, gasoline, and natural gas also contributing. | ||
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In core CPI, categories which increased in January include the shelter, motor vehicle insurance, recreation, apparel, and household furnishings and operations indexes. The indexes for used cars and trucks, medical care, and airline fares were among those that decreased over the month. | In core CPI, categories which increased in January include the shelter, motor vehicle insurance, recreation, apparel, and household furnishings and operations indexes. The indexes for used cars and trucks, medical care, and airline fares were among those that decreased over the month. | ||
== CPI expectations == | ==CPI expectations== | ||
January 2023 inflation forecasts are expecting a continuing decline in inflation to 6.2% Y/Y, this is mostly in line with the short-term drivers' trends. However, there are 2 points to remain cautious for February 14 release: | January 2023 inflation forecasts are expecting a continuing decline in inflation to 6.2% Y/Y, this is mostly in line with the short-term drivers' trends. However, there are 2 points to remain cautious for February 14 release: | ||
* There will be a change in methodology, which could create a big miss tomorrow if forecasts did not correctly account it: "Starting with January 2023 data, the BLS plans to update weights annually for the Consumer Price Index based on a single calendar year of data, using consumer expenditure data from 2021. This reflects a change from prior practice of updating weights biennially using two years of expenditure data."<ref>https://www.bls.gov/cpi/</ref> | *There will be a change in methodology, which could create a big miss tomorrow if forecasts did not correctly account it: "Starting with January 2023 data, the BLS plans to update weights annually for the Consumer Price Index based on a single calendar year of data, using consumer expenditure data from 2021. This reflects a change from prior practice of updating weights biennially using two years of expenditure data."<ref>https://www.bls.gov/cpi/</ref> | ||
* January 2023 saw a small acceleration in used car prices, energy/gasoline, and stabilization in housing, this could offset some of the disinflationary trends in goods and the small decline in wages. | * January 2023 saw a small acceleration in used car prices, energy/gasoline, and stabilization in housing, this could offset some of the disinflationary trends in goods and the small decline in wages. | ||
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''Range:'' | ''Range:'' | ||
* CPI: 6.0% - 6.5% | *CPI: 6.0% - 6.5% | ||
* Core CPI: 5.4% - 5.7% | *Core CPI: 5.4% - 5.7% | ||
If <6.0%: ≥ 5% rally | If <6.0%: ≥ 5% rally | ||
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if >6.5%: ≥ 5% drop | if >6.5%: ≥ 5% drop | ||
=== Consensus forecast <ref>https://www.investing.com/economic-calendar/</ref> === | ===Consensus forecast <ref>https://www.investing.com/economic-calendar/</ref>=== | ||
{| class="wikitable" | {| class="wikitable" | ||
|'''Variable''' | |'''Variable''' | ||
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|- | |- | ||
|Core CPI (MoM) (Jan) | |Core CPI (MoM) (Jan) | ||
|0.40% | | 0.40% | ||
|0.40% | |0.40% | ||
|0.4% | |0.4% | ||
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|} | |} | ||
=== FED Cleveland Forecast<ref>https://www.clevelandfed.org/indicators-and-data/inflation-nowcasting</ref> === | ===FED Cleveland Forecast<ref>https://www.clevelandfed.org/indicators-and-data/inflation-nowcasting</ref>=== | ||
{| class="wikitable" | {| class="wikitable" | ||
| | | | ||
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|'''Core CPI''' | |'''Core CPI''' | ||
|- | |- | ||
|Jan-23 | | Jan-23 | ||
|6.48 | |6.48 | ||
|5.59 | |5.59 | ||
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|} | |} | ||
=== JPM Forecast <ref>https://twitter.com/rhemrajani9/status/1625252382526304285/photo/1</ref> === | ===JPM Forecast <ref>https://twitter.com/rhemrajani9/status/1625252382526304285/photo/1</ref>=== | ||
{| class="wikitable" | {| class="wikitable" | ||
|'''January CPI''' | |'''January CPI''' | ||
|'''Probability''' | |'''Probability''' | ||
|'''S&P Reaction''' | |'''S&P Reaction''' | ||
|- | |- | ||
|Above 5% | |Above 5% | ||
|5% | | 5% | ||
|Down 2.5% to 3% | |Down 2.5% to 3% | ||
|- | |- | ||
|6.4% to 6.5% | |6.4% to 6.5% | ||
|25% | | 25% | ||
|Down 0.75% to 1.5% | |Down 0.75% to 1.5% | ||
|- | |- | ||
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|} | |} | ||
=== Specific institutions forecast <ref>https://twitter.com/gurgavin/status/1625157344303673346</ref> === | ===Specific institutions forecast <ref>https://twitter.com/gurgavin/status/1625157344303673346</ref>=== | ||
{| class="wikitable" | {| class="wikitable" | ||
|'''Institution''' | |'''Institution''' | ||
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|6.20% | |6.20% | ||
|- | |- | ||
|JP MORGAN | |JP MORGAN | ||
|6.20% | |6.20% | ||
|- | |- | ||
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|6.20% | |6.20% | ||
|- | |- | ||
|TD SECURITIES | |TD SECURITIES | ||
|6.20% | |6.20% | ||
|- | |- | ||
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|} | |} | ||
=== Commentary === | ===Commentary=== | ||
1. Inflation has a higher likelihood chance of remaining sticky, and the Fed could end up hurting the economy as it struggles to rein in soaring prices, according to economist Mohamed El-Erian.<ref>https://www.project-syndicate.org/commentary/why-the-resurgent-transitory-inflation-narrative-is-dangerous-by-mohamed-a-el-erian-2023-02</ref> | 1. Inflation has a higher likelihood chance of remaining sticky, and the Fed could end up hurting the economy as it struggles to rein in soaring prices, according to economist Mohamed El-Erian.<ref>https://www.project-syndicate.org/commentary/why-the-resurgent-transitory-inflation-narrative-is-dangerous-by-mohamed-a-el-erian-2023-02</ref> | ||
* He estimated that there was only a 25% chance of inflation steadily declining from here | *He estimated that there was only a 25% chance of inflation steadily declining from here | ||
* 25% chance that prices would bounce back sharply, causing a "U inflation" scare. | * 25% chance that prices would bounce back sharply, causing a "U inflation" scare. | ||
* Most likely scenario was inflation remaining sticky at 3%-4%, with a 50% probability. | * Most likely scenario was inflation remaining sticky at 3%-4%, with a 50% probability. | ||
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2. Jamie Dimon also believes there is a risk inflation could remain sticky at 3-4% (min 1:20)<ref>https://www.youtube.com/watch?v=2rvaBDK5jig</ref> | 2. Jamie Dimon also believes there is a risk inflation could remain sticky at 3-4% (min 1:20)<ref>https://www.youtube.com/watch?v=2rvaBDK5jig</ref> | ||
* He thinks is reasonable to expect the FED to pause at 5%, wait for the lags to take effect, and then hike again if inflation remains sticky. | *He thinks is reasonable to expect the FED to pause at 5%, wait for the lags to take effect, and then hike again if inflation remains sticky. | ||
==References== | |||
<references /> | |||