November 08, 2022 19:33 GMT
- Core CPI inflation is expected to moderate in October with a median 0.5% M/M following the 0.58% in September, with analysts expecting much of this stepdown to come from a faster decline in used cars plus a mechanical driver from health insurance within medical care services.
- Used car prices have been a specific story of the pandemic, which despite starting to cool slowly are still 50% above pre-pandemic levels in the CPI measure.
- Easing of specific supply chain pressures have already pushed auction prices lower, which are beginning to filter to CPI used cars (see first chart below) as some analysts look for a ~2% decline after the 1.1% in September.
- Broader supply chain pressures have also seen a trend easing over the past year, helping non-vehicle core goods inflation moderate, but most recently the NY Fed’s GSCPI measure has levelled off at 1 standard deviation above its average value (second chart).