Public Peek: Truflation US Inflation Update for December 2024
The following is a public peek at our exclusive monthly Truflation CPI update, available in full by subscription, here.
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Core inflation continues to be the driving force here, it is critical because it tends to be a more reliable signal of broader, more persistent inflationary pressures. If core inflation keeps rising, the Fed might be less inclined to ease up on rate hikes or cuts, even if headline CPI moderates somewhat due to temporary declines in energy prices or other volatile components.
A secondary driver in inflation this month is the expected festive seasonal boost which has affected multiple categories, including food and beverages.
It is not a surprise to see Goods inflation being a key driver but is of course more volatile than services. Goods have been a persistent driver over the last couple of months and in part is due to the continued higher input costs but also demand accelerating during this time of the year.
Exhibit 2 – Truflation key inflationary metrics: Goods vs Services vs Core Inflation
Given the persistent inflation in the essential categories, it suggests that the Federal Reserve may need to tread cautiously in its policy decisions as we look ahead into 2025, at least until inflation shows more consistent signs of retreat, but also balancing the economic growth with the associated incoming administration policies that could have significant ramifications on the economy.
Despite the varied category performances in this festive season, no doubt will continue into January, inflation will continue to be influenced by two critical factors: the labor market and the economic policies of President-elect Trump.
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The above is a public peek at our exclusive monthly Truflation CPI update, available in full by subscription, here.