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US CPI surprises to the downside

This report continues the consecutive monthly drops in inflation since July.

13 December 2022

US monthly inflation, as measured by CPI, surprised to the downside and by some margin. Expectations were for a 0.3% monthly increase (representing a 7.3% year-on-year move) but in actuality, we saw only a 0.1% increase as energy prices continue to push down the overall rate of inflation in the short term. Year-on-year inflation stands at 7.1%, considerably better than the close to 9% inflation print in July and this report continues the consecutive monthly drops since then. This allows for a moderation in hawkishness from the Fed and we will more than likely see a 50 bps interest rate hike later this week – the era of 75 bps meeting hikes is done. This does not mean a pivot; rates are not suddenly going to start coming down again - inflation at 7.1% year-on-year is still high but the lagged effects of hawkish policy is working and this means a pause is now the medium term outlook while the Fed allows for inflation to catch up with monetary policy. 


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Charles Hepworth

Investment Director
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