January CPI review: the disinflationary thesis remains intact

Despite the CPI recording its seventh consecutive month of lower YoY growth, as I anticipated in my January CPI preview, the increase in the MoM rate of inflation has ignited debate as to whether the US is on the cusp of a renewed move higher in YoY CPI inflation.

After flagging my expectation for a higher than expected consensus headline CPI print (actual YoY: 6.4%, consensus: 6.2%, my forecast: 6.3%), is there anything in the latest inflation numbers that has led me to materially change my view, being that YoY CPI inflation is set to see a significant decline during 2023, and that instead, a material shift higher in YoY CPI inflation lies ahead? No.

Let’s first unpack some of the key details from January’s CPI report, after which I will explain my broader, bigger picture thought process on where inflation is headed.

Used car prices fall again in January, as the CPI lags the Manheim index

As I articulated in my CPI preview, while some were concerned that increases in the Manheim Used Veh…