CIBC Research discusses its reaction to today's US CPI print for the month of November.
"There was some good news on the inflation front in the US in November, as prices decelerated by more than expected. The 0.1% monthly advance in total prices (vs. 0.3% expected) reflected a drop in energy prices that helped to offset an increase in food prices, while core prices also decelerated, to 0.2% on the month (vs. 0.3% expected). However, the softer core reading was driven by an easing in core goods prices, specifically used cars, reflecting supply chain improvements, and drops in medical care and transportation services. That masked price pressures in core services, with the shelter sub-index continuing to increase strongly, although the pace of monthly shelter increases subsided," CIBC notes.
"That left total annual inflation slower at 7.1%, and core at 6.0%. Although the downside surprise is a welcome development, the Fed remains on track to hike by 50bps tomorrow given that the downside was concentrated in a few components, and the labor market remains tight," CIBC adds.