January CPI In Line With Expectations

January US core CPI rose 0.3%, meeting expectations and confirming a benign inflation trend despite the likelihood that the Fed will skip a March rate cut.

Key Takeaways

• 1.US core CPI for January was 0.3% m/m, which was in line with expectations and avoided the historical pattern of early-year upside surprises.
• 2.SEB has removed its expectation for a Federal Reserve rate cut in March following this data.
• 3.Rent inflation is slowing, with monthly increases falling below the pre-pandemic trend, though core services elsewhere remain somewhat high.

Table of Contents

• Key points
• CPI as expected was a relief after previous January surprises
• Faster goods prices ex used cars
• Higher services prices but the trend for rents is slowing
• Less benign implications for core PCE
• Good enough to keep the Fed cutting but probably not in March
• Small adjustments to seasonal estimates

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