Back to Reports

Macro Flash Report

Consumer Price Index (CPI)

Takeaway:

Today’s YoY CPI (Consumer Price Index) print came in line with expectations and was up slightly, showing underlying stickiness in price pressure. This will not change the FED policy stance of slowly cutting interest rates in the near-term, because base effect dynamics imply continued disinflation well into 2Q25.

CPI YoY – Topline (dotted) & Core (solid)

In October, the annual Core (Ex Food & Energy) CPI held steady at the three-month high of 3.3%, meeting market expectations.

  • This measure highlights persistent inflationary pressures, particularly in the heavyweight shelter (4.9%, unchanged) and transportation services (8.2% vs 8.5%).

On a monthly basis, Core CPI rose by 0.3% in October, marking the same pace for a third consecutive month and matching forecasts.

Looking forward, the October data did little to alter expectations for a potential rate cut in December, as the probability of a December 25 basis point cut increased to around 80%, from about 60% prior to the release.

The annual topline CPI accelerated to 2.6%, up from 2.4% in September, which was the lowest rate since February 2021. This marks the first increase in inflation in seven months.

  • Energy costs declined less (-4.9% vs -6.8%), and inflation slowed for food (2.1% vs 2.3%).

On a monthly basis, CPI rose by 0.2%, marking the fourth consecutive month of this pace, also matching forecasts.

  • The index for shelter rose 0.4%, accounting for over half of the monthly increase.
Core CPI MoM

**The chart above shows MoM readings for Core CPI with structural trends highlights with corresponding red (inflationary) and green (disinflationary). When economists or analysts are talking about upcoming impacts from base effect, they are talking about the upcoming MoM readings that are about to be replaced. So, this chart shows us that if MoM readings remain simply in line with readings from the last 3 months, Core CPI YoY will be below 3% by April.