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Consumer Price Index: Difference between revisions
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== Near term inflation drivers == | == Near-term inflation drivers == | ||
=== 1. Wages <ref>https://tradingeconomics.com/united-states/wage-growth#:~:text=Wage%20Growth%20in%20the%20United,percent%20in%20March%20of%202009.</ref> === | === 1. Wages <ref>https://tradingeconomics.com/united-states/wage-growth#:~:text=Wage%20Growth%20in%20the%20United,percent%20in%20March%20of%202009.</ref> === | ||
Wages in the United States increased 6.17 percent in November of 2022 over the same month in the previous year. Due to the labor market still being resilient, we can still expect pressure to the upside in CPI in coming months, especially in the service sector. | Wages in the United States increased 6.17 percent in November of 2022 over the same month in the previous year. Due to the labor market still being resilient, we can still expect pressure to the upside in CPI in the coming months, especially in the service sector; however, the trend has been slowing recently. | ||
=== 2. Supply chain issues easing === | === 2. Supply chain issues easing === | ||
Supply chain pressures have been easing in the last few months, which will help improve the goods inflation | Supply chain pressures have been easing in the last few months, which will help improve the goods inflation, a trend that we have already started to see. | ||
* The GSCPI’s recent movements suggest that developments in Asia are slowing down the index’s return to normal historical levels.<ref>https://www.newyorkfed.org/research/policy/gscpi#/interactive</ref> | * The GSCPI’s recent movements suggest that developments in Asia are slowing down the index’s return to normal historical levels.<ref>https://www.newyorkfed.org/research/policy/gscpi#/interactive</ref> | ||
=== 3. PPI === | === 3. PPI === | ||
The PPI serves as a leading indicator for the CPI, so when producers face input inflation, the increases in their production costs are passed on to retailers and consumers. | |||
* PPI has been in a significant declining trend since Q2 2022, declining more than 4%. CPI has been following the same behavior in recent months and is expected to continue <ref>https://tradingeconomics.com/united-states/producer-prices-change</ref> | |||
=== 4. Housing Market === | |||
Shelter CPI is the biggest component in the core CPI for the US. The weighted shelter takes up 32.77% of CPI, of which 7.8% is rent and 23.68% is private housing, | |||
* Home prices have started to decline since July 2022<ref>https://tradingeconomics.com/united-states/case-shiller-home-price-index-mom</ref>, but due to the lagging shelter CPI data, this will start to be reflected in CPI until the second half of 2023. | |||
'''5. Energy''' | |||
== References: == | == References: == | ||