Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  The Consumer Price Index (CPI) Declined 0.1% in December
Posted Under: CPI • Data Watch • Employment • Government • Inflation • Markets • Fed Reserve • Interest Rates • Bonds • Stocks
Supporting Image for Blog Post

 

Implications:   Consumer prices posted the first monthly decline in two and a half years in December, closing out 2022 on a positive note.  While today’s headline decline in prices is a welcome sign of progress and will no doubt be taken as a signal that the Federal Reserve is succeeding in fighting inflation, it’s worth noting just how little progress has been made in the past calendar year. The consumer price index was up 7.0% in the 12-month period ending December 2021 and up 6.5% in the most recent twelve months.  No matter which way you cut it, inflation remains well above the Federal Reserve’s target of 2.0%.  The largest driver of today’s decline came from the volatile energy sector, specifically the price of gasoline which fell 9.4%.   Stripping out energy and its other volatile counterpart, food prices, “core” prices rose 0.3%. While there were a handful of “core” CPI categories that declined for the month, most notably airline fares (-3.1%) and used vehicles (-2.5%), these were offset elsewhere.   Housing rents were the main upward driver within the “core” measure, rising 0.8% for the month.  We expect housing rent inflation to remain high in 2023 because rents still have a long way to go to catch up to home prices, which skyrocketed during COVID.  Some analysts point to “real-time” rental indexes based on what new tenants are paying, which have softened in the last couple of months, as foreshadowing a drop in CPI rents.  But this process will take time before they bleed into the CPI, which covers all tenants and homeowners, not just new tenants.  Medical care services (0.1%) and auto insurance prices (0.6%) also contributed to “core” inflation in December.  While today’s report may be a welcome sign to the markets – make no mistake – the Fed is not out of the woods.  Much of the progress we have seen in the past few reports has come from volatile categories like energy which could come bouncing back just as rapidly. Inflation has now migrated from the goods sector into services which is what we will be closely watching in 2023.  Finally, initial unemployment claims fell 1,000 last week to 205,000, while continuing claims declined by 63,000 to 1.634 million.  These figures are welcome news on the labor market, but New Year’s Day was on a Monday last week and could have affected the seasonal adjustments.

Click here for a PDF version

Posted on Thursday, January 12, 2023 @ 10:41 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
 PREVIOUS POSTS
Not Goldilocks
High Frequency Data Tracker 1/6/2023
The ISM Non-Manufacturing Index Dropped to 49.6 in December
Nonfarm Payrolls Increased 223,000 in December
The Trade Deficit in Goods and Services Came in at $61.5 Billion in November
The ISM Manufacturing Index Declined to 48.4 in December
The Housing Outlook for 2023
High Frequency Data Tracker 12/30/2022
High Frequency Data Tracker 12/23/2022
New Single-Family Home Sales Increased 5.8% in November
Archive
Skip Navigation Links.
Expand 20242024
Expand 20232023
Expand 20222022
Expand 20212021
Expand 20202020
Expand 20192019
Expand 20182018
Expand 20172017
Expand 20162016
Expand 20152015
Expand 20142014
Expand 20132013
Expand 20122012
Expand 20112011
Expand 20102010

Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.