Key Takeaways:
Data: 3.4% YoY, 0.3% MoM
Forecasted: 3.2% YoY, 0.2% MoM
- Core CPI
Data: 3.9% YoY, 0.3% MoM
Forecasted: 3.8% YoY, 0.3% MoM
The latest CPI data on a month-over-month basis came in hot as we are seeing a rise of 0.3%, that was higher than expected, and two tenths higher from last month’s reading.
Headline inflation also came in hot at 3.4% on a year-over-year basis and exactly as expected — three tenths higher than 3.1% from last month’s reading. The best we had was in June 2023 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 by 0.3%, which is in line with what the survey had expected. On a year-over-year basis however, it is down by 3.9%, but did not hit economists’ expectations of 3.8%.
Read: US Inflation Falls To 3.1% In November, Within Expectations
What Is CPI?
CPI is the Consumer Price Index or otherwise known as the headline inflation data. This comes out once per month, generally right around the middle of the month, and it is in regards to the inflation data for the previous month. So this report is actually December’s inflation data from last year.
It is going to give us an idea of what is going on with inflation: Is it still going up? Is it coming down as they continue to try to tell us that it is? Is it holding steady? What is going on here? And is this inflation still a problem as of now?
Inflation Is Still Very Much A Problem
Here’s the problem with this whole situation, even though prices have gone up significantly over the last couple years — in fact, when inflation started to kick off in early 2021 — nearly three years ago now, the prices that we were paying on goods and services back in late 2020 to early 2021, are not nearly what we are paying today.
Many of us are thinking it would be nice if those prices came back down to those levels three years ago. Unfortunately, it is not happening. Meanwhile, all parts of the government around the world are going to continue to tell us that inflation is going down.
The true purpose of the CPI report is that it determines whether or not inflation is rising rapidly as it was over the last couple years, giving the illusion that prices are going down.
A Renter’s Nation
With the combination of high interest rates and escalating home prices, American homebuyers have experienced a strain on their budgets.
According to real estate mogul Grant Cardone, there will be a greater emphasis on renting in America than ever before.
“America will become a renter nation. You will rent your cars, you will rent where you live, you might even rent your clothes in the future,” Cardone said.
In a recent TikTok video, Cardone said that the savior of America will not be lower prices, it will be longer mortgages.
“In your lifetime, you will see mortgages go from 30 to 40, 50, and maybe even 60 years. You could, if you live long enough, see a 100-year mortgage in America,” he concluded.
Why Should We Care
We want to continue watching this closely because this is a key factor based on what the Federal Reserve is going to do later on this month when they get together for their Federal Open Market Committee (FOMC) meeting, which they have once every 6 weeks, which is around the very end of this month. The meeting is also going to predicate what the Fed does with their interest rate policies.
Read: Federal Reserve Officials Agrees They Will Not Cut Rates In 2023 As Inflation Accelerates
Final Thoughts
The benchmark of the Federal Reserve is generally around 2% – 2.5%, and we are still sitting significantly above that. If you look at it on a percentage basis, we are looking way higher than what they really want inflation to be.
Either way, things are changing very rapidly, and of course we have got to stick together in this community — it is a very busy time right now, and we all know what is coming in November of this year (US Presidential elections). It is just a matter of months away — even though it sounds like a very long time from now, it is going to go very fast. There are going to be a lot of big announcements and promises made between now and then from a variety of people as we all know.