Overall consumer prices edged higher in the US last month from October, while core price growth matched expectations at 0.3% on a month-to-month basis.
On a quick read, Tuesday’s crucial inflation update from the world’s largest economy did little to change the macro narrative ahead of 2023’s final FOMC meeting.
The 0.1% MoM advance on the all-items index was technically ahead of estimates. Consensus expected a second consecutive unchanged print on the headline measure. But the as-expected read on the core gauge is what counts.
On a YoY basis, both headline and core were in-line at 3.1% and 4%, respectively.
Energy prices fell, thanks entirely to another outsized drop on the gasoline index. The 6% MoM decline for November came on the heels of a 5% drop the prior month.
Electricity prices posted their largest MoM gain since July of 2022 but the annual rate, at 3.4%, remained tolerable. Recall that the 12-month pace of price growth for the electricity gauge reached an eye-watering 15.8% in August of 2022.
Grocery prices rose 0.1% from October. Notably, the 12-month rate on the food at home gauge is now below 2%.
1.7% counted as the slowest annual rate of price increases for groceries since June of 2021. That comes with the usual caveat: Slower inflation still means rising prices. 1.7% is on top of the price increases which piled up when grocery bills were rising at a double-digit annual rate for 11 straight months.
Used vehicle prices rose for the first time since May, but on a YoY basis, the series was still in deflation. Apparel prices posted one of their largest MoM declines (-1.3%) on record in data going back nearly six decades.
Shelter inflation is — how should I put this? — still a thing. OER rose 0.5% last month from October. Outside of the pandemic context, that counts as a very elevated monthly print.
The YoY readings on the rent gauges are still receding, and macro observers continue to insist that real-time measures of rents across America suggest shelter inflation is moderating. But I’d be remiss not to at least mention that until the resale inventory shortage currently supporting home prices abates, the threat of rekindled “roof inflation” (so to speak) will remain.
As a quick reminder: Redfin now has a gauge of national home prices that mimics (in some ways) the methodology of the Case-Shiller indexes. The Redfin measure suggested prices rose 6% YoY in October.
Finally, the CPI-derived “supercore” measures — core services ex-shelter and ex-rent/OER — rose 0.51% and 0.44% MoM, respectively. Those readings were meaningfully warmer than October’s month-to-month gains.
Although nothing in Tuesday’s release argued for escalatory rhetoric from the Fed, the data didn’t exactly make the case for a conciliatory (which is to say a dovish) message either. The supercore readings were too brisk, with the caveat that the Fed uses a PCE-based version.
When taken in conjunction with the robust November jobs report (and the accompanying warm AHE read and lower jobless rate), the CPI update argued for a “hawkish hold” from the Fed and, at the margins, against tipping more than 50bps of cuts through the 2024 dot.
