USA: inflation falls less than expected. Incoming squeezes
The US inflation data is less good than expected. The annual inflation rate in the United States slowed only slightly to 6.4% in January 2023 from 6.5% in December, less than market expectations of 6.2%. However, this is the lowest reading since October 2021. There was a slowdown in food prices (10.1% against 10.4%), while the cost of used cars and trucks continued to decrease (-11.6 % versus -8.8%). Conversely, the cost of housing increased faster (7.9% vs 7.5%) as did energy (8.7% vs 7.3%), with petrol prices rising by 1 .5%, reversing the 1.5% decline recorded in December. On the other hand, both fuel oil (27.7% vs 41.5%) and electricity prices slowed down (11.9% vs 14.3%). Although inflation showed signs of peaking at 9.1% in June last year, it remains more than three times above the Fed's 2% target and continues to point to a broad-based advance in the general level. prices, especially for services and housing. Here is the related graph:
The trend of the main inflationary components was as follows:
Let's see how the house, with rents, still remains the main element driving US inflation. Yet the real estate sector appears to be on the brink of a crisis, so we will probably see a slowdown in this component in the future. Let's see how the used car market has literally collapsed.
Core inflation excluding agriculture and energy is consistently high, and this chart shows how, not coincidentally, this boom began with the Biden administration and its huge stimulus and subsidy policies just when, with Covid, the offer was lacking.
The components driving core inflation are instead the following:
Also in this case the rent of the house takes the lion's share, with the contribution of household goods and medical expenses.
With a similar pattern of inflation, especially core inflation, it is to be expected that the Fed's restrictive policy will not cease anytime soon. Only strong signs of recession and crisis could convince the central bank to change course, but for now, expect only interest rate hikes.
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The US article: inflation falls less than expected. Strette incoming comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/usa-linflazione-cala-meno-di-quanto-di-ci-aspettasse-strette-in-arrivo/ on Tue, 14 Feb 2023 14:27:56 +0000.