{"id":77878,"date":"2023-10-28T14:53:44","date_gmt":"2023-10-28T18:53:44","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/what-to-expect-from-inflation-for-the-remainder-of-2023\/"},"modified":"2023-10-28T14:53:48","modified_gmt":"2023-10-28T18:53:48","slug":"what-to-expect-from-inflation-for-the-remainder-of-2023","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=77878","title":{"rendered":"What To Expect From Inflation For The Remainder Of 2023"},"content":{"rendered":"
\n

The Fed is broadly satisfied with cooling inflation for the U.S. economy over recent months, but will it continue? As 2023 draws to a close, there are some risks to inflation\u2019s trajectory, specifically housing, services and energy will in combination, likely define inflation\u2019s path.<\/p>\n

Recent Trends<\/h2>\n

So far in 2023 inflation has generally moved lower. Headline Consumer Price Index inflation started the year running at an over 6% annual rate, and as of September is under 4%. Core CPI, which strips out food and energy prices, has also moved lower, but at a slower rate.<\/p>\n

Upcoming Inflation Data Releases<\/h2>\n

For the remainder of calendar 2023 we\u2019ll see two more CPI releases, for October, on November 14 and, for November, on December 12. Wholesale Producer Price Index data will come a day later on November 15 and December 13 respectively. In addition, the Personal Consumption Expenditure Price Index, which is considered the Fed\u2019s preferred inflation metric, will be released as part of the Personal Income and Outlays report later in the month on November 30 for October\u2019s data and December 22 for November\u2019s data.<\/p>\n

Nowcasts<\/h2>\n

Latest nowcasts from the Cleveland Federal Reserve for October inflation suggest that headline inflation may cool further, in part, as the recent spike in certain energy prices drops back from September highs.<\/p>\n

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However, core inflation, with energy and food prices removed, may be broadly flat compared to September at 4.1%. That would be a concern for the Fed hoping for inflation returning to their 2% annual goal. The Fed has indicated that they would consider raising rates further if progress on inflation stalls. If nowcasts hold and inflation appears stick at over 2%, then the Fed may contemplate an addition interest rate hike in December or January.<\/p>\n

Housing Trends<\/h2>\n

Aside from volatility in energy prices, underlying trends in housing are likely inform the direction inflation takes over the coming months. That\u2019s because housing, whether via a mortgage or rental costs, is a major expense for most households and inflation calculations reflect that. Housing carries a large weight in inflation indices.<\/p>\n

The general pattern for 2023 has been shelter cost inflation easing as mortgage costs rise, but home prices have been trending up since spring of 2023 in part due to reduced supply. This may cause the trend of housing disinflation to reverse, at least temporarily, fueling inflation.<\/p>\n

Most economists do expect rising mortgage costs to ultimately put pressure on home prices, but we haven\u2019t really seen that, either in recent home price data or inflation figures yet.<\/p>\n

Wage Trends<\/h2>\n

Wage growth has eased in recent months and that should help cool prices for services. However, in absolute terms wage growth is still relatively high. According to the Atlanta Fed\u2019s Wage Growth Tracker, wage growth was over 5% for September 2023. That suggests services inflation may continue ease, something the Fed is watching for. Though it\u2019s unclear that wage growth at 5% will enable overall inflation to reach 2%.<\/p>\n

The Main Question<\/h2>\n

It\u2019s clear U.S. inflation is down materially from peak levels of 2021-2022 and that\u2019s welcome news for the Fed and economy. However, it\u2019s unclear if inflation will return to the Fed\u2019s 2% target in short order, or whether inflation may prove sticky at a higher level before it gets there.<\/p>\n

Some also argue that economic shocks could push inflation up further from current levels. 2023 will almost certainly be a year of cooling inflation in aggregate, but whether that trend continues as the year draws to a close is less certain and depends to some degree on trends in the housing market.<\/p>\n

The Fed will be watching closely. If inflation does not continue to move closer to their 2% goal, then a further interest rate increase is possible, even though the Fed is expected to hold rates steady in November.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The Fed is broadly satisfied with cooling inflation for the U.S. economy over recent months, but will it continue? As 2023 draws to a close, there are some risks to inflation\u2019s trajectory, specifically housing, services and energy will in combination, likely define inflation\u2019s path. Recent Trends So far in 2023 inflation has generally moved lower. […]<\/p>\n","protected":false},"author":1,"featured_media":77879,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-77878","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-featured"],"yoast_head":"\nWhat To Expect From Inflation For The Remainder Of 2023 | iFintechWorld<\/title>\n<meta name=\"description\" content=\"The Fed is broadly satisfied with cooling inflation for the U.S. economy over recent months, but will it continue? 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