The Dec CPI details far better…ex-auto insurance, core CPI +0.25% MoM. Inflation still falling like a rock.

The video in this report is only accessible to members
The video in this report is only accessible to members
The video in this report is only accessible to members

VIDEO: We discuss how the Dec CPI was actually very good, only blemished by auto insurance which is now 50% of core services CPI. (Duration: 4:41).

The video in this report is only accessible to members
The video in this report is only accessible to members

December CPI was released yesterday with core CPI coming in at +0.31% MoM, slightly ahead of consensus of +0.3%. Many pundits viewed this report as evidence inflation progress is too slow and even Cleveland Fed President Mester weighed in yesterday, saying yesterday's report another argument why Fed should not cut in March. Our analysis of the inflation report, however, suggests the opposite. This was a very good CPI report and inflation is still falling like a rock, likely again in evidence in January CPI report.

3 of top 5 contributors to Core CPI in Dec are auto-related:- Shelter ex-hotels +0.20% (of Core CPI)- Auto insurance +0.06- Recreation svcs +0.04- Used cars +0.02- New cars +0.01Total Core CPI +0.31% Auto insurance is 3.6% weight and was 20% of Core CPI inflation. That is punching way above its weight. Auto insurance prices are surging because of huge loss severities from the past few years. The reason being car prices surged post-pandemic sending up a huge rise in auto repair bills. This mean...

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