- Federal Reserve has inflation figures under control.
- US Inflation Table barely shows any meaningful trends.
- USD reaction to a predictably stable US CPI release expected to be limited.
Price stability is one of the two big mandates for the Federal Reserve board, so US inflation releases used to be considered big events for the market. But these days inflation figures seem to be an afterthought in the eyes of Fed officials and thus, the markets.
The Fed has been so successful in managing to keep core inflation figures around its 2% target that it's been more than eight years since the Consumer Price Index ex Food & Energy has printed a number outside the 1.5%-2.5% range.
More: US CPI Preview: Stable and secondary
Today's US CPI release is expected to stay in this path, with headline year-over-year figure expected to stay at 1.8% and the YoY core reading forecasted to tick up by just a paltry 0.1%, from 2.2% to 2.3%. That wouldn't move the needle much and the Fed will predictably look elsewhere when assessing its difficult monetary policy decision next week. Therefore, only a release with a big diversion with these figures should have notably big effects on the US Dollar.
Stability everywhere in the US Inflation Table
This stability can be seen on our US Inflation Table, with almost every key inflation indicator showing a neutral trend, not only in the consumption-related figures, but also in salaries and even housing market prices.
The slight downtrend in the headline CPI YoY figures (also in the headline PCE and PPI YoY readings) is running out of gas with oil prices regaining some steam and the short-term pick up in the MoM core CPI reading is still modest, so there's not much to read there.
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The most-meaningful trend right now seems to be the negative path Import Price Index is on, with USD strength having a significant deflation effect there. But even that trend has its limitations and it can hardly be attributed to structural macroeconomic changes.
| Consumer-related inflation | Impact | Last | Trend | Last 3 | Last 5 | Last 10 |
|---|---|---|---|---|---|---|
| CPI exFood/Energy YoY | 3 | 2.20% | Neutral | 2.10% | 2.08% | 2.12% |
| CPI exFood/Energy MoM | 3 | 0.30% | Up | 0.23% | 0.18% | 0.18% |
| CPI YoY | 2 | 1.80% | Down | 1.73% | 1.82% | 1.88% |
| CPI MoM | 2 | 0.30% | Neutral | 0.17% | 0.24% | 0.16% |
| Core PCE Price Index YoY | 2 | 1.60% | Neutral | 1.60% | 1.60% | 1.71% |
| Core PCE Price Index MoM | 2 | 0.20% | Neutral | 0.20% | 0.16% | 0.14% |
| PCE Price Index YoY | 1 | 1.40% | Down | 1.43% | 1.46% | 1.55% |
| PCE Price Index MoM | 1 | 0.20% | Neutral | 0.17% | 0.20% | 0.14% |
| PPI exFood/Energy YoY | 2 | 2.30% | Down | 2.23% | 2.28% | 2.43% |
| PPI exFood/Energy MoM | 1 | 0.30% | Neutral | 0.17% | 0.16% | 0.18% |
| PPI YoY | 1 | 1.80% | Down | 1.73% | 1.84% | 2.03% |
| PPI MoM | 1 | 0.10% | Neutral | 0.13% | 0.14% | 0.13% |
| GDP Price Index | 2 | 2.50% | Neutral | 1.67% | 1.96% | 1.93% |
| ISM Prices Paid | 2 | 46.00 | Down | 46.33 | 48.44 | 51.11 |
| Redbook Index YoY | 1 | 6.40% | Up | 6.20% | 5.58% | 5.33% |
| Redbook Index MoM | 1 | -0.40% | Neutral | -0.93% | -1.30% | -0.45% |
| Labor-related inflation | Impact | Last | Trend | Last 3 | Last 5 | Last 10 |
|---|---|---|---|---|---|---|
| Average Hourly Earnings YoY | 3 | 3.20% | Neutral | 3.17% | 3.16% | 3.19% |
| Average Hourly Earnings MoM | 2 | 0.40% | Neutral | 0.30% | 0.26% | 0.25% |
| Personal Income MoM | 2 | 0.10% | Neutral | 0.33% | 0.32% | 0.34% |
| Employment Cost Index | 1 | 0.70% | Neutral | 0.73% | 0.72% | 0.67% |
| Housing-related inflation | Impact | Last | Trend | Last 3 | Last 5 | Last 10 |
|---|---|---|---|---|---|---|
| Housing Price Index MoM | 1 | 0.20% | Neutral | 0.23% | 0.22% | 0.29% |
| Trade-related inflation | Impact | Last | Trend | Last 3 | Last 5 | Last 10 |
|---|---|---|---|---|---|---|
| Import Price Index YoY | 1 | -1.80% | Down | -1.77% | -1.10% | -0.49% |
| Import Price Index MoM | 1 | 0.20% | Neutral | -0.33% | -0.04% | -0.22% |
| Export Price Index YoY | 1 | -0.90% | Down | -1.07% | -0.46% | 0.38% |
| Export Price Index MoM | 1 | 0.20% | Neutral | -0.23% | 0.04% | -0.09% |
| Manufacturing-related inflation | Impact | Last | Trend | Last 3 | Last 5 | Last 10 |
|---|---|---|---|---|---|---|
| Kansas Fed Manufacturing Activity | 1 | -2 | Down | -3.67 | 0.60 | 2.40 |
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