January US CPI preview: expecting slightly hotter headline but core in-line with consensus

After falling from a YoY growth rate of 9.1% in June 2022 to 6.5% in December, I expect US inflation to fall further in January. My forecast is slightly above consensus on a headline basis, but slightly below consensus on core inflation.

Let’s dive in to my latest CPI preview, beginning firstly with durables prices.

Rise in used car prices was at the wholesale level — changes generally occur with a lag in the CPI

After rising by an enormous YoY rate of 18.7% at their peak in February 2022, durables prices have seen a MASSIVE turnaround, with YoY prices falling into outright DEFLATION just 10 months later.

A key catalyst for this turnaround has been the sharp declines that have been recorded in CPI used car and truck prices, which have fallen for five consecutive months.

Though with the Manheim Used Vehicle Value Index recording growth over the past two months, many have begun to suggest that durables prices will turn higher. There’s two caveats to this. The first thing to note is that the …