CPI a little softer than expectations
US consumer price inflation came in a little softer than expected.
Headline inflation was only +0.2 per cent in the month, to be +3.2 per cent higher over the year.
90 per cent of the increase was accounted for by shelter, but rents will eventually flatten out when the figures catch up to the 'real time' market reality.
Markets had expected a potential +3.3 per cent increase.
Over the next few months some higher readings will drop off the year-on-year figures, taking headline inflation down closer towards 2 per cent.
Source: BLS
Core inflation also came in again at just 0.2 per cent for the month, and so continues to trend lower over the year.
Source: BLS
Overall, while the year-on-year figures are above target, annualising the past 3 months of data gets you to headline of inflation of just 1.89 per cent (or around 3 per cent for core inflation).
As rents roll over inflation should head lower from here.
Looking at other measures of core services inflation which exclude shelter show that inflation has dropped away quite sharply.
Good news for the Federal Reserve, with markets suggesting their hiking cycle could now be just about done.
