1Michael Feroli (1-212) 834-5523michael.e.feroli@jpmorgan.comJPMorgan Chase Bank NADaniel Silver (1-212) 622-6039daniel.a.silver@jpmorgan.comMurat Tasci (1-212) 622-0288murat.tasci@jpmchase.comNorth America Economic ResearchGlobal Data Watch16 February 2024J P M O R G A Nexpect major news coming from the economic reports in the upcoming holiday-shortened workweek.The undead CPI reportThe January CPI data were firmer than expectations, with the headline up 0.3% during the month and the core index rising 0.4% (0.392% to three decimals). The broad trend in headline inflation continued to moderate, with the related year-ago rate cooling from 3.4% to 3.1%oya between December and Janu-ary. The year-ago rate on the core also continued to trend lower into January, but it is hard to feel confident that the broad trend for core inflation is moderating when the January increase was the largest monthly gain since April 2023 and the related three-month run rate picked up to its highest level since June 2023, hitting 4.0% saar in January (Figure 1). While the January strength in the core CPI marked a change from what had been a softer trend over the prior few months, that month on its own may not be indicative of the new underlying trend. -202468102018201920202021202220232024%ch, saarFigure 1: Core CPI run ratesSource: BLS, J.P. MorganOver 12monthsOver 3monthsOver 1monthThere were only a few major categories of the CPI with weak readings in January. Energy prices fell 0.9% in January, con-tinuing their recent downward trend. Apparel prices also con-tinued their recent soft run, declining 0.7% in January. Used vehicle prices, meanwhile, dropped 3.4% that month, mark-ing their largest monthly decline since 1969. This plunge in used vehicle prices kept the broad core goods aggregate trending lower in January (-0.3%), but away from used vehi-cles, core goods prices ticked up 0.1% in January, marking their largest monthly increase since early 2023. The food price index in the CPI, meanwhile, rose 0.4% in January, which was the largest increase since January 2023. And the core services price index jumped 0.7% in January, posting the largest monthly increase since September 2022 and showing strong readings throughout many of the related subcategories. The supercore index (core services ex. rent measures) jumped 0.8% in January, marking one of its largest monthly increases in recent decades. And owners� equivalent rent also looked firm, rising 0.6% (although the tenants� rent •January CPI was a brusque reminder that the path back to 2% inflation will have bumps on the way•The trend in retail sales growth looks to be moderating after a strong 2023•Disappointing prints on January manufacturing out-put and housing starts•Fed minutes next week could shed light on QT plansThe story of 2023 was one of downside surprises on inflation and upside surprises on grow...
