CPI Inflation Peaked During June & Continues to Moderate

Stock prices soared this morning on November's better-than-expected inflation news, but gave back much of the gain as investors realized that Fed Chair Jerome Powell might remain hawkish at his press conferencce tomorrow becuase inflation remains too high. The S&P 500 closed up 0.72% at 4019, just below its 200-day moving average of 4025.

The CPI rose 7.1% y/y in November, a slowdown from 7.7% the month before (table). Overall inflation has been decelerating on a y/y basis since hitting a peak around 9% in June. After stripping out food and fuel prices, which are volatile, the index climbed by 6%. The slowdown in inflation was driven by food, energy, and used vehicles. Food price inflation slowed, but grocery bills remain historically high. Rents continued to rise rapidly in November.