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Inflation Prediction for February - CPI stable in the 3.2 - 3.8% through mid-2024

January 2023 data release February 13, 2024


Editors note: TCV Economist Bill Knudson's inflation forecasts have been on target over recent history. He brings 30+ years of experience and an intuitive approach that works.


Watch mortgage rates. The CPI forecast suggests downward mortgage rate pressure. For those who took out mortgages in the last 2 years, you may have a refi opportunity in the next 6 months. The economic truism is the rates "rocket up and feather down." It is all about the lag timing of how long it takes the feather to fall ....


The biggest wild card is medical costs. Medical inflation is outstripping other components of the CPI.

- Jeff Hulett

 

Consumer Price Index (CPI) Actual and Projected


Table of contents

1.       Projected vs Actual, Monthly CPI in the Pipeline

2.       Projection through November 2024

3.       Total CPI Month Bar and Annual Line

4.       Food Month Bar and Annual Line

5.       Energy Month Bar and Annual Line

6.       Core Month Bar and Annual Line

7.       Shelter Month Bar and Annual Line

8.       Medical Services Month Bar and Annual Line

9.       New Car Prices Month Bar and Annual Line

10.   Used Car Prices Month Bar and Annual Line

 

INFLATION: January 2024 as reported on 2.13.24

Jan 2024 ’s monthly CPI was 0.3% and replaced the Jan 2023 monthly 0.1%

This caused the annual to decrease from 3.3% to 3.1%.

 

INFLATION Projection: For the past 12 months, the monthly CPI has been 0.3%. If this continues, below is where inflation will be come January 2025.

 

Total CPI: The annual CPI is a rolling product of 12 monthly data points. Think it as being 12 dominoes, as a new one comes on, the oldest one falls off --- Jan 2023’s 0.5% dropped off and was replaced by Jan 2024 0.3%. This caused the annual CPI to decrease from 3.3% to 3.1%. Annual CPI will likely decrease as Feb 2023 0.4% fall out and if replaced by 0.3% (the monthly average for 2023).

 

FOOD: Continues to improve as older monthly tall bars from late 2022 fall off. February 2024 will see further improvements.

 

ENERGY: For January, Jan 2023 monthly was 2.0% and it was replaced by a <0.9%>. A negative number replaced a positive number, as such the annual energy CPI decreased Looking forward the monthly energy CPI numbers are negative. This will not be good for reducing inflation.

 

Core CPI: Core represents 77% of all CPI. Of this shelter is the largest component representing 32% of all consumer expenditures. Core improved slightly as the older bar fell off. Core will likely improve over the next 4 months as the months that will roll off are above the 0.3% average.

 

SHELTER: Core Shelter comprises nearly a third of the CPI. It should continue to improve as the older tall blue bars fall off, especially for the upcoming months of February - May.

 

MEDICAL SERVICES: Oct 2022 was the last tall positive bar. Decreases in Medical Service prices has been a major contributor to the overall CPI improvement but that stopped in November as the negative totals from late 2023 started dropping off, annual Med CPI will continue to rapidly increase.

 

NEW CARS: The slowdown in new car prices continues to help the overall CPI improvement. The very tall green spikes are a thing of the past.

 

USED CARS: The improvement to overall CPI due to used car prices will slow as the negative older months continue falling off in February – March. Come April and May, there will be a substantial improvement.



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