CIBC Research discusses its reaction to today's US CPI print for the month of December.
"Inflation heated up to a scorching 7.0% y/y pace in the US in December, the fastest rate seen since 1982. Supporting the advance was a 0.5% m/m rise in prices, but it was the core group (excluding food and energy) that provided most of the lift. Core prices were up by 0.6% m/m on jumps in used cars and shelter prices. That left core inflation at 5.5% y/y, a tick hotter than expected, and the fastest pace seen since 1991. Omicron could put further upwards pressure on goods prices temporarily in the months ahead due to supply chain disruptions, while weaker demand for services could provide a partial offset," CIBC notes.
"Although supply chain issues will likely fade once omicron is behind us, the Fed will want to act to lean against escalating wage pressures and rising shelter inflation, and is therefore set to hike rates in March, provided that omicron is in the rear view mirror," CIBC adds.