US inflation slowdown has much more to go
US consumer price inflation slowed more than expected in October. Higher borrowing costs will increasingly weigh on activity and corporate pricing power while slowing housing rents will be the main driver of disinflation over the next two quarters. With 2% inflation looking possible by next summer the pricing of rate cuts will intensify.
Inflation pressures are subsiding
US October CPI has undershot market expectations for both headline and core inflation. The headline rate is 0% month-on-month/3.2% year-on-year versus consensus predictions of 0.1%/3.3% while core (ex-food and energy) is 0.2%/4.0% versus predictions of 0.3%/4.1%. The biggest component, owners’ equivalent rent, cooled to 0.4% MoM from 0.6% MoM, but we are hopeful of much more to come. Energy fell 2.5%, led by a 5% MoM drop in gasoline while both used and new car prices fell (-0.1% and -0.8%, respectively) and airline fares fell 0.9% with hotel prices dropping 2.9%. The big uncertainty ahead of time was medical care costs and changes to methodology and history, but it doesn’t appear to have been as big a story as feared, with prices up 0.3% MoM, though still down -0.8% YoY.
CPI ex food and energy MoM, 3M annualised & YoY%
![Turbulent Q2'23 Results for [Company Name]: Strong Exports Offset Domestic Challenges](https://www.fxmag.com/media/cache/main_box_filter/uploads/articles/2022-FXMAG-COM/GPWA/gpw-s-analytical-coverage-support-programme-wse-2-6311cd4191809-2022-09-02-11-30-41-63175bda84812-2022-09-06-16-40-26.png "Warsaw Stock Exchange: Brand24 (B24) - 1Q23 financial results")
![Turbulent Q2'23 Results for [Company Name]: Strong Exports Offset Domestic Challenges](https://www.fxmag.com/media/cache/article_small_filter/uploads/articles/2022-FXMAG-COM/GPWA/gpw-s-analytical-coverage-support-programme-wse-2-6311cd4191809-2022-09-02-11-30-41-63175bda84812-2022-09-06-16-40-26.png "Warsaw Stock Exchange: Brand24 (B24) - 1Q23 financial results")
