12/11/2021
Wow, many market observers were wondering before the report if we got a six handle on the US headline CPI print with unemployment sub-5% and the Fed still buying $120 billion of bonds per month. Lo and behold we need not imagine any longer.
US inflation surged 6.2% in October, four-tenths above estimates and the highest in more than thirty years. On a monthly basis, the CPI increased 0.9% against the 0.6% estimate. Stripping out volatile food and energy prices, so-called core CPI was up 0.6% against the estimate of 0.4%. Annual core inflation ran at a 4.6% pace, compared to the 4.3% expectations and the highest since August 1991.
Prices swelled across all sectors, but the 0.7% m/m increase in housing has caught analysts’ eyes. This is a measure that reflect underlying trend inflation and is especially significant as it makes up around a third of the headline rate and roughly 40% of the core. Anything above 0.5% signals more persistent inflation ahead.