The latest Consumer Price Index (CPI) data for December revealed that CPI ex-food and energy remained unchanged at +0.3%, a sign of stability in these key sectors. November’s CPI saw a slight increase of 0.2% compared to the previous 0.1%, while October showed a +0.1% increase from unchanged. The core six-month annualized CPI decreased to 3.0% from 3.3%, which is a significant metric monitored by the Federal Reserve. Initial reactions to the CPI revisions resulted in the US dollar experiencing a dip, but overall, the figures were met with relief as they didn’t show higher than expected inflation rates.
Federal Reserve Chair Jerome Powell highlighted the importance of these changes in the CPI data, emphasizing the Fed’s close watch on these key indicators. The January CPI report, scheduled to be released next Thursday, is anticipated to show a drop in the year-on-year reading to 2.9% from the previous 3.4%. This is largely due to the +0.5% month-on-month reading from January 2023 rolling off. The upcoming report will offer insight into how the annual update to the seasonal factors may impact the inflation picture, with hopes that it will confirm the progress seen in recent data. However, Powell emphasized the importance of basing policy on factual data rather than optimism.
As illustrated in the pre-revision year-on-year CPI chart and the month-on-month chart, the upcoming CPI report and revisions for 2023 will be closely scrutinized for any potential changes in the inflation landscape. The Fed’s attention to these figures reflects the central bank’s commitment to making informed policy decisions based on accurate economic data.
