Cleveland Fed Inflation Nowcast: CPI 0.07% Month-over-Month; 3.28% Year-over-Year

This may be the trough in the inflation numbers, with upticks to start again with the December report released in January 2024. First though the various series tracked by the Federal Reserve Bank of Cleveland, updated each working day:

Inflation, month-over-month percent change

Month	CPI	Core CPI	PCE	Core PCE	Updated
November 2023	0.08	0.34	0.14	0.30	11/10
October 2023	0.07	0.34	0.14	0.30	11/10

 

Inflation, year-over-year percent change

Month	CPI	Core CPI	PCE	Core PCE	Updated
November 2023	3.16	4.20	3.04	3.64	11/10
October 2023	3.28	4.16	3.12	3.63	11/10

October 2023 is the CPI to be reported next week, October 2023 PCE last week of the month. November CPI reported second week of December.

As goods inflation moderated, led by declines in energy and food commodities as well as food intermediaries (reported in the PPI) services inflation remained stuck.

Now, in addition to sticky services prices,  we will be seeing an uptick in goods-manufactured-in-the-U.S. prices as recent wage and salary agreements begin to flow into end pricing. Chinese goods will still have a deflationary bias as that economy has too much stuff manufactured and for sale.

The most troubling area for increased goods prices will be in food where the decline in agricultural commodity prices was never fully reflected in end product groceries (headline CPI) and have now seen some large percentage increases—albeit off a low base—which will be moving through the PPI, raw, intermediary, finished; and thence into the CPI.

Here's an example for folks who don't follow this stuff obsessively. Soybeans and especially soybean oil end up in everything from a fine pork cutlet to salad dressing:

We'll probably be talking about the crush spread in a month or two.

Meanwhile, corn and wheat appear to have ended their decline for this growing season and though it may be too early to call a bull move, they do seem to be forming a bottom on their respective charts (note switch in time period to emphasize the bigger picture):

If this should come to pass as the U.S. economy slows down it is possible we enter a stagflationary hellscape. 

Fortunately there's a trade for that.