December 2022 CPI Update

by Mike Tubbs, Quantitative Portfolio Analyst, with Lauren Rosales-Shepard, Content Writer

The Bureau of Labor Statistics announced in their November report that the Consumer Price Index (CPI) rose 0.1% (7.1% annual change). This is one of the most optimistic updates of the year, and a significant shift downwards from October’s high of 0.4%. Core inflation was 0.2% for the month, which is happily down from 0.3% in October.

Core goods prices have fallen quite rapidly and were actually negative contributors this month, while core services continue their downward trend. This has been most evident in used-car prices which have recently rapidly fallen.

Though shelter costs remain a strong contributor to the current inflationary environment, it’s important to remember that these indices are quite backward-looking. Most leases are on an annual basis and so there is a noteworthy lag from six to twelve months in the CPI calculations. Former CEA Chairman Jason Furman substituted new leases into the calculator and core CPI actually fell by a staggering -1.2%.

The key takeaway is that the Fed’s tightening cycle has drastically affected all the prices in the CPI even if they haven’t materialized in the current rent estimates. This is a slightly optimistic review; taken correctly, with the recent 50bps rate hike, the Fed may be close to the terminal rate and feel that they have adequately addressed inflationary concerns. The pace of rate hikes can be expected to slow over the next few FOMC meetings. In that case, we expect inflation to moderate and a soft landing as mortgage rates have peaked, and new leases enter the existing CPI calculations.

The content on this page provides general consumer information. It is not legal or financial advice. Unison has provided these links for your convenience, but does not endorse and is not responsible for the content, links, privacy policy, or security policy of the other websites.

Related posts

Congratulations! Once you’ve accepted your offer and received your funds, it’s time to start planning your next big move – from paying down debt to starting a new business and beyond.
In a rapidly changing landscape, it can be difficult to keep up as a homeowner. Check out our "State of the American Homeowner" Report for insights and more.
Unison Process

Ending the Agreement

Ready to bring our partnership to an end? There are four ways in which your Unison Agreement can come to a close.