Core Inflation Rose More Than Expected Again in January, Fed Hawkish Rhetoric Justified

Consumer prices continue prove to be sticky in the US, core CPI continues to run hot. The Fed favors the core metric as a better gauge of inflation trends. Core CPI, which excludes food and energy, was up 0.4% month-over-month (consensus 0.3%) after increasing 0.3% in December. Shelter prices, which make up about a third of the overall CPI index jumped 0.6%, accounting for more than two thirds of the overall increase. On a year-over-year basis core CPI was up … Continue reading “Core Inflation Rose More Than Expected Again in January, Fed Hawkish Rhetoric Justified”

Reserve Bank of Australia Does Not Rule Out Future Hikes

The Reserve Bank of Australia kept rates unchanged at 4.35% as widely expected by analysts, keeping rates at the highest level since May 2012. RBA Governor Bullock sounded as there was in no hurry to cut rates describing rate risks as “fairly balanced” with inflation still “too high” and said, “a further increase in interest rates cannot be ruled out.” The messaging from the RBA was “we are not ruling in anything or out anything” and “need to stay the … Continue reading “Reserve Bank of Australia Does Not Rule Out Future Hikes”

FAO World Food Price Index Fell in January 2024 to lowest level since February 2021

World food prices as measured by the FAO Food Price Index continued to fall, down for a sixth month to 118 index points in January 2024, the lowest level since February 2021. The index is 13.7 points (10.4%) lower from a year ago, well off the record hit in March 2022 after Russia invaded Ukraine. Cereals prices were down 2.2% to December 2020-lows as global wheat export prices declined amid strong competition among exporters and arrival of recently harvested supplies … Continue reading “FAO World Food Price Index Fell in January 2024 to lowest level since February 2021”

Core PCE Prices in December at 6 Month Annualized 1.9%, Below Fed’s 2% Target

The core PCE Price Index, which is the Fed’s preferred inflation gauge, rose 0.2% in December (consensus 0.2%) following a 0.1% increase in November. This is the sixth month in the last seven where monthly inflation has printed at a rate equal to or below the Fed’s 2% target. The PCE Price Index rose 0.2% in December (Briefing.com consensus 0.2%) following a 0.1% decline in November. With the December changes, the PCE Price Index was up 2.6% year-over-year, unchanged from … Continue reading “Core PCE Prices in December at 6 Month Annualized 1.9%, Below Fed’s 2% Target”

Central Bank of Turkey Raises Another 250 bps to 45%, Signaled End of Rate Hikes

The Central Bank of Turkey hiked by another 250bps from 42.5 percent to 45 percent as expected. It also signaled the end of rate hikes by stating “that the monetary tightness required to establish the disinflation course is achieved and that this level will be maintained as long as needed.” This was consistent with expectations this would be the final hike after the central bank said at its last decision in December that the goal was to “complete the tightening … Continue reading “Central Bank of Turkey Raises Another 250 bps to 45%, Signaled End of Rate Hikes”

Consumer Inflation in December Rises Most in Three Months

Consumer prices have been proving sticky in the US, accelerating the most in three months in December. The CPI increased 3.4% in the year through December. On a monthly basis, it also rose by more than forecast, up 0.3%, the most in three months and above forecasts of 0.2%. The CPI core, excluding food and energy rose 0.3% in December from a month earlier and on an annual basis increased 3.9%. The Fed favors the core metric as a better … Continue reading “Consumer Inflation in December Rises Most in Three Months”

First Decline in PCE Prices since 2020, Soft Landing Case Boosted by Real Disposable Personal Income

The Federal Reserve’s preferred inflation gauge, the core PCE Price Index, which omits food and energy, increased 0.1% month-over-month (consensus 0.2%), taking the year-over-year change to 3.2% from 3.4%. The PCE Price Index declined 0.1% month-over-month consensus 0.1%), taking the year-over-year change to 2.6% from 2.9% in October. That was the first decline in the PCE Price Index since 2020. Prices are moving in the right direction for the Fed, but caution needed as Fed speakers’ remarks remind to think … Continue reading “First Decline in PCE Prices since 2020, Soft Landing Case Boosted by Real Disposable Personal Income”

Central Bank of Turkey Raises Rates By 250 bps to 42.50%, Up 35% since May

The Central Bank of Turkey hiked rates by another 250bps from 40 percent to 42.5 percent at its December meeting. The bank said headline inflation edged up in November and remains in line with the outlook presented in the most recent Inflation Report. The existing level of domestic demand, stickiness in services inflation, and geopolitical risks keep inflation pressures alive. The move follows a hike of 500bps at its November meeting. The move was its seventh big interest rate hike … Continue reading “Central Bank of Turkey Raises Rates By 250 bps to 42.50%, Up 35% since May”

Swiss National Bank Leaves Rates Unchanged at 1.75% and Lowers Inflation Forecast

The Swiss National Bank kept its policy rate at 1.75% in its December meeting, it came after the Federal Reserve had signaled a pivot towards lowering rates in 2024 the day before. The SNB also lowered its inflation forecast for next year but warned that uncertainty was clouding the decision-making path ahead. The decision follows Swiss annual inflation fell to 1.4% in November, down from 1.7% in October, driven by lower inflation on goods and tourism services, the bank said. … Continue reading “Swiss National Bank Leaves Rates Unchanged at 1.75% and Lowers Inflation Forecast”

US Producer Prices Continue to Deflate in November with Lower Energy Prices

The Producer Price Index for final demand in November continued with the disinflation view, PPI was unchanged month-over-month (consensus 0.1%), as was the index for final demand less foods and energy (consensus 0.2%). On a year-over-year basis, the index for final demand was up 0.9%, versus 1.2% in October, and the index for final demand less foods and energy was up 2.0%, versus 2.3% in October. The index for processed goods for intermediate demand was unchanged month-over-month while the index … Continue reading “US Producer Prices Continue to Deflate in November with Lower Energy Prices”