DB: Risk CPI Revisions See Similar Second Half Uplift To Last Year

Deutsche Bank write on Friday's annual CPI revisions to seasonal factors.

• “The Feb 2023 update to the seasonal factors recontextualized how inflation evolved through 2022 by slightly lowering the inflation rates in 1H23 and raising them in 2H23.”
• “With a Fed that was then looking at the shorter run trends in inflation for guidance on the level of rates that was sufficiently restrictive, the slower pace of disinflation in 2H22 seen after the update to the seasonal factors was evidence that level had not yet been reached. Similarly, the disinflation in 2023 was concentrated in 2H23, so there is the risk of something similar happening this year.”
• “Indeed, both Governor Waller, ahead of the January FOMC meeting, and Powell, in his press conference, highlighted the revisions to the seasonal factors as something that they would be paying close attention to.”