US Core CPI Eases to Four-Year Low Amid Data Concerns

Core CPI Slowdown

• 🎯 The core Consumer Price Index (CPI) saw its slowest annual pace since early 2021, rising 2.6% from the previous year in November.
• 💡 This underlying inflation rate showed a modest increase of 0.2% over the two months ending in November.
• 📉 Declines in costs for hotel stays, recreation, and apparel contributed to the slowdown.

Data Murkiness and Imputed Prices

• ⚠️ Concerns were raised about the "dodgy" nature of the CPI data, specifically due to the use of imputed prices.
• 🏠 The owners' equivalent rent, a significant component of CPI, is highlighted as a particular area of concern.
• 📊 Comparing August to November data showed an annualized increase of approximately 1% for shelter costs.
• 📈 However, comparing September to July showed a 4% annualized increase, suggesting a potential artificial manipulation of the October number.

Future CPI Impact

• 🗓️ The October number was made identical to the September number, and the November number was based on this, artificially lowering shelter costs.
• ⏳ Because owners' equivalent rent is calculated only every six months, this artificially low figure is expected to carry forward for another 2-3 months.
• 🚀 The Nasdaq 100 saw a rally, partly attributed to Micron's performance, even before the CPI report was released.