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Inflation Cooled In December

January 17, 2023 by Paul Myers, Myers Capital Management

Last week the inflation numbers for the month of December were released, and the news was positive. JP Morgan, one of the Portfolio Strategists we utilize for client accounts, wrote this about the inflation numbers in their Weekly Market Recap…

While the story last year was about inflation peaking, the 2023 narrative is shifting toward how quickly inflation can cool, and furthermore, how much cooling will be sufficient to get the Fed to pause its rate-hiking campaign. Last week, December’s CPI came close to expectations, and marked the sixth consecutive decline in the headline CPI on a year over-year basis and the first monthly decline since June 2020. Core CPI on the other hand, which peaked three months after the headline figure, registered an increase of 0.3% month over month.


Turning to the details, energy prices declined by 4.5% relative to November, and there was also a moderation in food price increases to 0.3%month over month. Core goods, helped by abating supply chain bottlenecks, declined by 0.3%. On the other hand, core services came in firm at 0.5%, but were
largely boosted by shelter prices (0.8%m/m), which are expected to reflect recent moderation in the rental market with some lag. As such, the Fed will continue to closely watch core services inflation ex-shelter, given its relation to the labor market and still strong demand for services.


The Fed is likely to welcome this much-awaited progress on inflation by slowing the pace of rate hikes in February. However, the Fed will want to see further evidence that inflation is cooling, especially in services, before it will feel comfortable taking a pause. Looking further out, this report confirms that the inflation surge is ebbing; barring any shock, this cooling inflation environment should lead to a more symmetric approach to monetary policy as the year progresses, which will likely be positive for both stocks and bonds.

Filed Under: Myers Cap Post

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The Myers Cap Post

  • What’s In The Secure Act 2.0
  • Clark Capital Quarterly Economic and Market Review and Outlook
  • Inflation Cooled In December
  • Three Takeaways From 2022
  • Has the Inflation Beast Been Slain, and is There Another Beast Around the Corner?
  • Employment and GDP… Implications For Coming Recession
  • Economy Contracts In December, But Unemployment Drops
  • Merry Christmas!
  • Inflation Hurts Consumers, But Seems To Be Trending Down
  • Fed Raises Interest Rates Again
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Myers Capital Management, Inc. (“MCMI”) is a registered investment adviser located in Abington, PA. MCMI’s website is limited to disseminating general information about its advisory services and access to additional investment-related information, publications, and links. Accordingly, the publication of MCMI’s website on the Internet should not be construed by any consumer or prospective client as MCMI’s general solicitation to effect or attempt to effect transactions in securities or the rendering of personalized investment advice for compensation. We do not collect personally identifiable information about you when you visit our website unless you voluntarily provide it by sending us an email or other electronic communication(s). If you choose to share with us personal information, we will retain it in our electronic communications archive. Any subsequent, direct communication by MCMI with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. MCMI does not take any responsibility, representations, or warranties regarding the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, including website links. All such information is provided solely for convenience, guidance, and informational purposes only, and all users should be guided accordingly. Investments involve risk and, unless otherwise stated, are not guaranteed. This website and information are not intended to provide investment, tax, or legal advice and no warranties are implied. Before implementing any strategy, consult with a qualified financial adviser and/or tax professional. Insurance products and services are offered and sold through Myers Capital Management, Inc., and individually licensed and appointed insurance agents. For information about MCMI, please refer to the SEC’s investment adviser public information website at www.adviserinfo.sec.gov or upon written request from Myers Capital Management, Inc. No product or service is offered or will be sold in any jurisdiction in which such offer or solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction. This web site is intended to be made available only to individuals in the United States, and the information on the web site is only for such persons. • Copyright Myers Capital Management, Inc.
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