US CPI/PPI - 2023-12-11

A mixed bag in CPI this morning -- the FOMC tomorrow will be able to project whatever it wishes into it. Goods, half that basket, are in downright year-on-year deflation. And most categories are decelerating. But Powell's super-secret private index, core services ex-shelter, a minority of the basket (but the one he focuses on), is accelerating (thanks to the methodological change in the calculation of medical services, which have an even larger weight in PCE than in CPI). This is not the clarion call warning of deflation that we had expected and hoped for. We'll have to wait another month for that -- nothing in this changes our expectations.