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Wednesday 14 December 2022

US inflation slows to 0.1 per cent in November

Team transitory

Not much need to add to the reams of commentary except to note that US inflation was only 0.1 per cent in November.

The annual figure dropped from 7.7 per cent to 7.1 per cent.

Core inflation came in at 0.2 per cent, and slowed to 6 per cent over the year. 

Source: BLS

Unlike in Australia, rents account for a heavy weighting in the inflation figures, and shelter by far and away accounted for most of the inflation in November. 

Rents are still flying in the US, accelerating 7.1 per cent over the year.

However, rents are a lagging indicator, and most private measures see rents falling ahead.

Zillow's measure shows rents were up just 0.06 per cent in November, the slowest increase since June inflation should drop further from here. 

Source: Bloomberg

The 3-month change in food inflation slowed to a still high 7.8 per cent, well down from the highs of 13.9 per cent.

Other than rents and food, there wasn't much inflation around at all.

The Fed should consider a pause in interest rates after the next hike, having already taken the target Funds rate up to 3.75 per cent to 4 per cent.