Key Takeaways:
Data: 3.1% YoY, 0.1% MoM
Forecasted: 3.1% YoY, 0.0% MoM
- Core CPI
Data: 4.0% YoY, 0.3% MoM
Forecasted: 4.0% YoY, 0.3% MoM
The latest CPI data coming at a month-over-month basis, we are seeing a rise of 0.1%, that was more than expected. Last month’s reading of 0% was the best read since May of 2020.
Headline inflation came in line with expectations at 3.1% on a year-over-year basis and exactly as expected — one tenth lighter than 3.2%. The best we had was June of this year at 3.0%, and that was the best since 2021.
The core number stripping out food and energy on a month-over-month basis is up 0.3% which is in line with what the survey had expected. On a year-over-year basis, it is up 4%, exactly the same as last month’s reading — these readings were the best since May of 2021, which was 3.8%.
Read: US Inflation Falls To 3.2% In October, Lower Than Expectations
Consumer Sentiment
The Federal Reserve has been raising interest rates aggressively for almost two years now — and as a result of that, it has made things very expensive for us. Interest rates are through the roof, and it is getting really tough for a lot of people to borrow money and kind of make ends meet because there is no money flowing into the economy, getting all siphoned away by interest rates and higher prices.
The vast majority of the inflation reports that we have seen here for the last year and a half or so, we still see food, shelter, health care and transportation continue to increase.
What do seniors and fixed income beneficiaries spend the vast majority of their money on? There you go — transportation, health care, food and shelter. That makes up virtually all of the income and the expenditures for fixed income beneficiaries.
Fed’s Goal To 2% Inflation
From right now to mid-January, we will be getting the next inflation report next month for December. This will help us a lot to see where inflation really goes in 2023.
In June of 2022, about a year and a half ago, it topped out at 9.1% — it took about a year to get there from when it started increasing in about mid-2021 and took about a year to hit the peak.
And here we are, a year and a half later, and we are still seeing elevated inflation. It is going to take a long time for the Federal Reserve to hit their target of 2%, and they continue to say they are going to stick to that plan until they achieve it.
Read: Federal Reserve Officials Agrees They Will Not Cut Rates In 2023 As Inflation Accelerates
Final Thoughts
There is usually a lot of volatility the week of an FOMC meeting where the Fed is going to tell us if they are going to continue to pause rates or raise again or cut.
Now, I personally think they are just going to continue to pause. I do not think rate cuts are coming anytime soon. I think it may happen early next year. In fact, I think they are going to keep rates at the current level, but we never know what could happen.
However, as stated, there is usually a lot of volatility around that because the markets are trying to figure out what is going to happen next.