CPI

2022 - 11 - 10

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Image courtesy of "Forbes"

Encouraging CPI Inflation Report May Signal An Earlier Fed Pause (Forbes)

Certain prices are starting to fall in the U.S. according to CPI inflation data. This may encourage the Fed to soften its approach to higher rates in the ...

Also, a large portion of rising prices is due to housing costs given their large weight in the CPI. So the general picture is that inflation is still very high and well above the Fedโ€™s target. Food prices are still rising sharply in aggregate, but perhaps these increases are slowing. The reason for this is the statistical details of how the CPI series is calculated, making it more of a lagging indicator of house prices over recent months. In fact, the pace of increase accelerated in the November report as was the largest monthly rise since November 1990. These falling prices can help offset those prices that are still rising and help bring inflation down. Food prices may be starting to ease. This is welcome news as rising food prices hit those on lower incomes disproportionately. If and when it does that may help push inflation lower. These were low enough to cause the year-over-year inflation rate rate to fall to 7.7%. This is just one month of price data, but contained a lot of hints that suggest U.S. Still, we have some way to go before inflation hits the Fedโ€™s 2% goal.

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Image courtesy of "Bloomberg"

S&P 500 Rockets Toward Best CPI Day Since 2008 on Fed Optimism (Bloomberg)

Optimism that the fight against inflation could be getting closer to its end is fueling a stock-market rally across Wall Street.

in New York, putting the gauge on track for its best inflation-day session since the global financial crisis in 2008, and its best day overall since April 2020. The S&P 500 Index rose 4.5% at 12:25 p.m. Optimism that the fight against inflation could be getting closer to its end is fueling a stock-market rally across Wall Street.

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