December 2023 data release January 11, 2024
Editors note: TCV Economist Bill Knudson's inflation forecasts have been on target over recent history. He brings 30+ years of experience and an intuitive approach that works.
Watch mortgage rates. The CPI forecast suggests downward mortgage rate pressure. For those who took out mortgages in the last 2 years, you may have a refi opportunity in the next 6 months. It is all about the lag timing ....
The biggest wild card is medical costs. Medical inflation is outstripping other components of the CPI
- Jeff Hulett
Consumer Price Index (CPI) Actual and Projected
Table of contents
1. Projected vs Actual, Monthly CPI in the Pipeline
2. Projection through December 2024
3. Total CPI Month Bar and Annual Line
4. Food Month Bar and Annual Line
5. Energy Month Bar and Annual Line
6. Core Month Bar and Annual Line
7. Shelter Month Bar and Annual Line
8. Medical Services Month Bar and Annual Line
9. New Car Prices Month Bar and Annual Line
10. Used Car Prices Month Bar and Annual Line
INFLATION: December 2023 as reported on 1.11.24
Dec 2023 ’s monthly CPI was 0.3% and replaced the Dec 2022 monthly 0.1%.
This caused the annual to increase from 3.1% to 3.3%
INFLATION Projection: For the past 12 months, the monthly CPI has been 0.3%. If this continues, below is where inflation will be come December 2024.
Total CPI: The annual CPI is a rolling product of 12 monthly data points. Think of it as being 12 dominoes, as a new one comes on, the oldest one falls off---Dec 2022’s 0.1% dropped off and was replaced by Dec 2023 0.3%. This caused the annual CPI to increase from 3.1% to 3.3%. Annual CPI will decrease as Jan and Feb 2023 fall out.
FOOD: Continues to improve as older monthly tall bars from late 2022 fall off. January and February 2024 will see further improvements.
ENERGY: For December, Dec 2022 was <3.1%> and it was replaced by 0.4%. A positive number replaced a negative number, and as such the annual energy CPI increased In January the large 2.0% from January 2023 will fall out.
Core CPI: Core represents 77% of all CPI. Of this shelter is the largest component representing 32% of all consumer expenditures. The core improved slightly as the older bar fell off. The core will likely improve over the next 5 months as the months that will roll off are above the 0.3% average.
SHELTER: The Core Shelter comprises nearly a third of the CPI. It should continue to improve as the older tall blue bars fall off, especially for the upcoming months of January-March.
MEDICAL SERVICES: Oct 2022 was the last tall positive bar. Decreases in Medical Service prices had been a major contributor to the overall CPI improvement but that stopped in November as the negative totals from late 2023 started dropping off, and annual Med CPI will rapidly increase.
NEW CARS: The slowdown in new car prices continues to help the overall CPI improvement. The very tall green spikes are a thing of the past.
USED CARS: The improvement to overall CPI due to used car prices will slow as the negative older months continue falling off in January - March.
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