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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 19:26, 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 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 | 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 in my opinion 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 not 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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Key Takeaways from May CPI numbers: | Key Takeaways from May CPI numbers: | ||
* 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 | * 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, they 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 acceleration again in May, especially motor vehicle insurance. This component is considered to be highly dependent on labor costs or repair costs. | * 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. | ||