Consumer inflation rundown/Mfr'g recession continues on in January

As I mentioned this morning, we had a bond set up that was very oversold and with the softer UK CPI figure boosting gilts was a good combination for a bond rally and we’re certainly getting it with the one tenth US CPI miss relative to the core estimate.

The headline gain of .4% m/o/m and 2.9% y/o/y was spot on with the forecast. Energy prices jumped by 2.6% in the month and expect more gains in the months to come though still down .5% y/o/y. Food prices gained another .3% m/o/m and by 2.5% y/o/y. Specifically for food at home prices, they rose .3% m/o/m and 1.8% y/o/y. For those eating out, prices were up .3% m/o/m and by 3.6% y/o/y.

While still having more to go, the slower rental growth taking place on the ground is continuing to work its way into the BLS calculation but still slowly. Services inflation ex energy was up .3% for the 3rd straight month and by a still elevated 4.4% y/o/y. Owners’ Equivalent Rent was up by .3% m/o/m and 4.8% y/o/y. Rent of Primary Residence also gained .3% m/o/m and by 4.3% y/o/y. Medical care costs rose .2% after a .4% rise in November and up 3.4% y/o/y. But, not realistically measuring inflation is healthcare insurance inflation which saw no change in December and is up 4.8% y/o/y. I’d love whatever health insurance policy that is ‘only’ up about 5% y/o/y. Vehicle insurance prices were up .4% m/o/m and 11.3% and remains very high. Vehicle maintenance costs were up .2% and by 6.2% y/o/y. Airline fares, reacting to the cuts in capacity, jumped by 3.9% in the month and higher by 8% y/o/y. This was partly offset by a 1.2% drop in hotel prices, though still up 2.3% y/o/y.