US DATA
While almost all major categories of CPI came in above expectations in January, the contribution to the monthly core M/M figure (0.3% M/M, vs 0.0% Dec) saw some sequential slowdowns as well as accelerations.
- We start with core goods inflation, which swung from contributing negative 0.01pp to overall core CPI in December, to a positive 0.07pp contribution in January (a 0.3% M/M rise vs 0.0% in Dec).
- This rise in core goods was entirely accounted for by used vehicles, which posted 2.2% M/M gains, a 20-month high - new car inflation decelerated (0.0% vs 0.4% prior).
- Non-vehicle core goods neither contributed nor added to core CPI in January, but this contrasts with subtracting 0.04pp in December.
- This a particularly unusual outcome since apparel had one of the biggest monthly drops (-1.4% M/M) in its history, and easily the biggest fall since the start of the pandemic in 2020.
- And in addition, household furnishings (a large 3.4% of the CPI basket) saw a second consecutive 0.2% decline.
- Instead it looks like the core goods acceleration was driven by a wide swathe of items. Recreational (1.8% of CPI) and education/communication commodities (0.8% of CPI), alcoholic beverages (0.8% of CPI), and "other goods" (notably personal care products) each entered positive M/M territory after declines in December.
208 words