IVOV - January U.S. CPI: A Small Setback For The Immaculate Disinflation

2024-02-13 18:25:00 ET

Summary

• The consumer price index (CPI) for January showed that core inflation held steady at a rate of 3.9% last month, a small setback in a trend of moderating inflation in the U.S.
• Healing in global supply chains and a rebalancing of the U.S. labor market have helped to dramatically tame inflation over the past year.
• We're slightly cautious on the market outlook, as most positive inflation news has already been priced in and recession risks still look elevated. For long-term investors, we believe it’s best to stay disciplined and stick close to your strategic asset allocation.

Inflation was a key concern for investors in 2022. Transitions away from high inflation periods have been difficult for central bankers to achieve without slowing down the cycle, or worse, tipping the economy over into recession. Into this checkered history, the recent run of inflation news has been fantastic, on balance, with six of the last seven core PCE (personal consumer expenditures) inflation readings coming in at/below the Federal Reserve’s 2% goal....

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