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Consumer Price Index:Historical Releases/2023 May: Difference between revisions
Consumer Price Index:Historical Releases/2023 May (view source)
Revision as of 19:18, 13 June 2023
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== Assessment by Magaly == | == Assessment by Magaly == | ||
May CPI numbers saw a big jump down from 4.9% to 4%, and | May CPI numbers saw a big jump down from 4.9% to 4%, and disinflation is expected to continue in June, with estimates already in the low 3%, but is still early to think that inflation will get to the 2% target soon, as most of the decline in these 2 months will be due to the base effects in 2022, and after June 2023 the CPI trajectory starts to be less certain, and probably more sticky at those levels. Hence, in my opinion, this big decline in CPI is still npt enough to change anytime soon the FED plan to keep rates higher. | ||
After CPI numbers, the market is now pricing an almost 100% possibility of a pause in rates in June. But a rate hike in July is still at 60%. <ref>https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html</ref> | After CPI numbers, the market is now pricing an almost 100% possibility of a pause in rates in June. But a rate hike in July is still at 60%. <ref>https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html</ref> | ||
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* Shelter and used car prices are the majority of the increase in May core CPI, this is positive as we already know the lags in data in these 2 components that will start to moderate in coming months. | * Shelter and used car prices are the majority of the increase in May core CPI, this is positive as we already know the lags in data in these 2 components that will start to moderate in coming months. | ||
* Excluding shelter and used cars from core CPI(which has lag effects in the data), most other important components saw very moderate or even negative contributions. | * Excluding shelter and used cars from core CPI(which has lag effects in the data), most other important components saw very moderate or even negative contributions. | ||
* Transportation continues to be the biggest contributor for supercore numbers, which saw an | * Transportation continues to be the biggest contributor for supercore numbers, which saw an acceleration again in May, especially motor vehicle insurance. This component is considered to be highly dependent on labor costs or repair costs. | ||
* Energy price declines are having a very negative contribution on headline CPI, which we have to remain cautious, as energy is a very volatile component, especially in current environment with cut supply efforts. | * Energy price declines are having a very negative contribution on headline CPI, which we have to remain cautious, as energy is a very volatile component, especially in the current environment with cut supply efforts. | ||
== Summary == | == Summary == | ||