An imperfect US CPI report [Video]
|The latest US CPI report looked like an early Christmas gift: headline inflation cooled sharply, core inflation surprised to the downside, and markets briefly celebrated the return of disinflation. But was it really that simple?
A closer look reveals a far messier picture. Large parts of the October pricing data were missing, including key components such as shelter, a heavy weight in the CPI basket. Those gaps were effectively treated as showing no price growth, flattering the inflation numbers and earning the report its “Swiss cheese” nickname.
Markets initially cheered, yields dipped and equities rallied, before reality set in and enthusiasm faded. With energy prices creeping higher, shelter disinflation moving slowly, and jobs data sending mixed signals, the inflation outlook remains anything but clear.
So what does this imperfect CPI print really tell us? And does it change what the Fed should do next — or just add more noise to an already confusing picture?
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