US Consumer Prices Rise For Seventh Straight Month, Shelter Inflation At Decade Lows

Today’s inflation print is key. After significant signs of cost pressures (PMIs all signaling record or near record rising prices) and commodity prices breaking out from multi-year downtrends, analysts did expect a bump in CPI but nothing overly concerning.

As Marija Veitmane, senior multi-asset strategist at State Street Global Markets, warned, “The market is very relaxed about it and should we get high inflation that would be a big pressure. The 10-year is probably the key variable to watch. If you have a very strong positive surprise then you will probably start thinking about the Fed being a bit more aggressive in their intervention and pushing yields lower.”

The final print actually matched expectations, rising 0.4% MoM (vs +0.2% MoM in November) pushingthe YoY print for the headline CPI up to +1.4%. This is the seventh straight rise in consumer prices..

Source: Bloomberg

Goods inflation is accelerating as the rise in services costs are slowing rapidly…

Source: Bloomberg

A silver lining, of sorts, is that shelter/rent inflation is slowing dramatically…as home prices soar?

• Shelter Inflation 1.84% Y/Y, lowest since Nov 2011

• Rent inflation 2.28% Y/Y, lowest since Oct 2011

The debacle of ‘owner-equivalent rent’ strikes again: According to BLS housing inflation is at 10 year low even as home prices surge 8%, a 7 year high.