CIBC Research discusses its reaction to today's US CPI print for the month of December.
"Consumers saw relief in the form of lower gasoline prices in the US in December, with the total CPI falling by 0.1% m/m, in line with expectations. However, prices accelerated in categories outside of food and energy, as the core CPI rose by 0.3% m/m, also in line with expectations. That included a drop in core goods prices amidst elevated inventories, against stronger pressure in core service categories, with shelter prices being the main factor behind the increase in core prices, a measure which hasn't yet picked up the impact of softer rents on new leases. The remainder of core service categories, which the Fed is more focused on, looked mixed," CIBC notes.
"The annual pace of total and core inflation decelerated to 6.5% and 5.7%, respectively, and with the shelter sub-index softening ahead, and the impact of past interest rate hikes materializing more, the Fed will likely be able to pause after a final 50bps hike at the next FOMC,"CIBC adds.