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US DATA: Notable How Core Services Beat Driven By Supercore Rather Than Rents

US DATA
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The lack of an upside surprise from rental inflation within the January CPI report was notable, considering the beat for core CPI was concentrated in non-housing core services (plus core goods) and the Fed is more sensitive to market-based services prices rather than the imputed CPI rents series.

  • Within the details, OER printed 0.31% M/M (range 0.28-0.36) after an unrevised 0.31% in Dec, whilst primary rents saw a modest beat with 0.35% M/M (range 0.27-0.32) after a marginally downward revised 0.30% in Dec.
  • It left the weighted average of 0.32% M/M in January after 0.31% M/M. The 0.25% M/M in Nov (revised up from 0.23%) is still the only month since Apr 2021 that has been at or below the 0.27% averaged pre-pandemic when looking for a crude look at normalization progress.
  • Whilst the Fed is likely to have confidence that housing inflation will continue to moderate considering the pipeline implied by new lease data, progress has been slower than expected and it will need to see mutiple months with softer monthly prints.
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The lack of an upside surprise from rental inflation within the January CPI report was notable, considering the beat for core CPI was concentrated in non-housing core services (plus core goods) and the Fed is more sensitive to market-based services prices rather than the imputed CPI rents series.

  • Within the details, OER printed 0.31% M/M (range 0.28-0.36) after an unrevised 0.31% in Dec, whilst primary rents saw a modest beat with 0.35% M/M (range 0.27-0.32) after a marginally downward revised 0.30% in Dec.
  • It left the weighted average of 0.32% M/M in January after 0.31% M/M. The 0.25% M/M in Nov (revised up from 0.23%) is still the only month since Apr 2021 that has been at or below the 0.27% averaged pre-pandemic when looking for a crude look at normalization progress.
  • Whilst the Fed is likely to have confidence that housing inflation will continue to moderate considering the pipeline implied by new lease data, progress has been slower than expected and it will need to see mutiple months with softer monthly prints.
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