The Cleveland Fed estimates 6.3% Core CPI for November. CPI data will be published on Tuesday. The 6.3% Core CPI estimate sounds about right. One would expect Core CPI to be flat to slightly down in November. I would expect the Fed to push its Fed Funds Rate north of 5% in 1H 2023 and up to 6% next year if Core CPI remains stubborn at around 5-6%. Headline CPI of approximately 7.5% is a reasonable estimate for November.
- Oil prices continue to decline.
- Shelter continues to increase.
- Used vehicle prices are down while new vehicle prices are up (not for too much longer in our view as the consumer pulls back on discretionary spend).
- Food prices continue to increase both for food at home and food away from home. I don’t see food prices abating – especially “food away from home” – until unemployment ticks up to around 4.5% (November’s unemployment rate was 3.7%).
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