11thJanuary 2024
Thursday
On January11th, a series of significant economic announcements are expected from theUnited States. These include the release of key metrics such as the CoreConsumer Price Index (CPI) on a monthly basis, overall CPI for both monthly andyear-over-year comparisons, and the latest figures on Unemployment Claims.These releases are highly anticipated for their potential impact on economicpolicy and market trends.
USD – Core CPI m/m
The bulk ofoverall inflation is represented by consumer prices. This aspect of inflationplays a vital role in determining the value of currency, as escalating pricesoften prompt the central bank to increase interest rates in alignment withtheir commitment to controlling inflation.
In November 2023,the core consumer prices in the United States, which exclude food and energy,rose by 0.3% compared to the prior month, aligning with market forecasts andmarking a slight uptick from the 0.2% increase seen in the previous month. Thistrend suggests ongoing disinflation in the US economy, reflecting the impact ofthe Federal Reserve's monetary tightening measures. Notably, there was a 0.5%rise in consumer prices for services, excluding energy services, driven byincreases in shelter, transportation, and medical care services. In the goodssector, used cars and trucks prices experienced a 1.6% surge, while new vehicleprices remained stable and apparel prices fell. From a year-on-yearperspective, the core consumer prices showed a 4% increase.
TL;DR
Category
Monthly Change
Notes
1 Core Consumer Prices (excl. food & energy)
+0.3%
Slight increase from previous month's +0.2%
2 Consumer Prices for Services (excl. energy services)
+0.5%
Increases in shelter, transportation, and medical care services
3 Used Cars and Trucks
+1.6%
Notable surge in prices
4 New Vehicles
No change
Prices remained stable
5 Apparel
Decrease
Prices fell
6 Year-on-Year Core Consumer Prices
+4%
Represents a 4% increase from the previous year
According to thelatest forecast, the CPI m/m in the United States is expected to remainsteady at 0.3%, mirroring the previous month's results. This indicates aconsistent trend in the core inflation rate.
USD – CPI m/m
The majority oftotal inflation is reflected in consumer prices. Inflation's significance inthe valuation of currency is evident, as higher prices often compel the centralbank to increase interest rates, adhering to their mandate to controlinflation.
In November2023, the US consumer price index recorded a modest month-over-month increaseof 0.1%, exceeding the anticipated flat rate and following October's stablefigures. This increase was largely attributed to a 0.4% rise in shelter costs,a step up from the 0.3% increase seen in the previous month. A notable shiftoccurred in the used cars and trucks index, which saw a 1.6% rise, breaking afive-month trend of continuous declines. The food index, however, experienced adeceleration, growing by 0.2%, a decrease from the 0.3% growth in the precedingmonth. In contrast, the energy index fell by 2.3%, primarily due to asignificant 6% decrease in the gasoline index, which outweighed increases inother energy components such as electricity (1.4%) and natural gas (2.8%).
TL;DR
Category
Monthly Change
Notes
1 Overall CPI
+0.1%
Exceeded expectations, following a stable October
2 Shelter
+0.4%
Increase from previous month's +0.3%
3 Used Cars and Trucks
+1.6%
A notable rise, ending a five-month trend of declines
4 Food Index
+0.2%
Deceleration from previous month's +0.3% growth
5 Energy Index
-2.3%
Led by a significant -6% decrease in the gasoline index
6 Gasoline Index
-6.0%
Major contributor to the decline in the overall energy index
7 Electricity
+1.4%
Increase in electricity prices
8 Natural Gas
+2.8%
Increase in natural gas prices
The latestforecast for the CPI m/m suggests a small rise to 0.2%, up fromthe previous figure of 0.1%.
USD - CPI y/y
Consumer pricesmake up a significant portion of total inflation. Inflation plays a crucialrole in the valuation of currency, as increasing prices typically prompt thecentral bank to hike interest rates, in line with their mandate to keepinflation in check.
In November2023, the United States recorded a dip in its annual inflation rate to 3.1%,the lowest in five months, meeting market expectations and showing a slightdecline from October's 3.2%. This slowdown was largely due to a significant5.4% reduction in energy costs, with gasoline prices dropping 8.9%, utility gasservices falling 10.4%, and fuel oil prices plummeting 24.8%. Additionally,there was a moderation in price increases across several categories: foodprices rose by 2.9% compared to 3.3% previously, shelter costs went up by 6.5%instead of 6.7%, new vehicle prices increased by 1.3% as opposed to 1.9%, andapparel prices grew by 1.1%, down from 2.6%. Used cars and trucks pricescontinued their downward trend, albeit at a slower rate of -3.8% compared to-7.1%. On a monthly scale, consumer prices saw a slight increase of 0.1%,defying expectations of a flat rate and contrasting with the static figuresfrom October, as rising shelter costs balanced out the decline in the gasolineindex. Core inflation remained unchanged at 4%, while the monthly rate edged upto 0.3% from 0.2%, aligning with projections.
TL;DR
Category
Annual Change
Monthly Change
Commentary
1 Overall Inflation Rate
3.1%
+0.1%
Lowest in five months, slight decline from October's 3.2%
2 Energy Costs
-5.4%
Not Specified
Significant reduction, majorly impacting the inflation rate
3 Gasoline Prices
-8.9%
Not Specified
Major contributor to the decline in energy costs
4 Utility Gas Services
-10.4%
Not Specified
Significant decrease in utility gas prices
5 Fuel Oil Prices
-24.8%
Not Specified
Drastic drop in fuel oil prices
6 Food Prices
+2.9%
Not Specified
Moderate increase compared to previous month
7 Shelter Costs
+6.5%
Not Specified
Slight decrease from previous rate
8 New Vehicle Prices
+1.3%
Not Specified
Reduced rate of increase compared to previous month
9 Apparel Prices
+1.1%
Not Specified
Deceleration in price growth
10 Used Cars and Trucks Prices
-3.8%
Not Specified
Continued decline, but at a slower rate
11 Core Inflation (excl. food and energy)
Unchanged at 4%
+0.3%
Monthly rate edged up, aligning with forecasts
The projected CPIy/y forecast suggests a minor decline to 3.0%, down from theprevious rate of 3.1%.
The upcomingdata for the USCore CPI m/m, CPIm/m, and CPI y/y is scheduled to be announced on January 11th at 1:30 PMGMT.
The last time, the US CoreCPI m/m, CPI m/m, and CPI y/y was announced on the 12th ofDecember 2023. You may find the market reaction charts (AUDUSD M5) below:USD – Unemployment Claims
While oftenconsidered a delayed indicator, the unemployment rate is crucial in assessingthe economy's health, as consumer spending significantly correlates with thestate of the job market. Additionally, unemployment figures are a key factorfor policymakers in guiding the nation's monetary policy.
In a positivedevelopment for the U.S. economy, unemployment claims experienced a significantdecline in the last week of 2023. New filings had dropped by 18,000 to 202,000,surpassing market expectations which had predicted claims to be around 216,000.This decrease marked the lowest level of new filings since October. Inaddition, ongoing claims also fell by 31,000 to 1,885,000, indicating thatAmericans were finding it easier to secure new employment. These latest figureswere in line with other recent reports, all of which pointed to the sustainedstrength of the U.S. labor market. Such robust conditions afforded the FederalReserve additional leeway to continue its assertive measures into 2024 tocombat inflation, if necessary.
The forecast for the US Unemployment Claims is showing an increase to 210,000.
The upcoming release of Unemployment Claimsdata is scheduled for release on January 11th at 1:30 PM GMT.
The last time, the USUnemployment Claims was announced on the 04th of January 2024. Youmay find the market reaction chart (EURUSD M5) below:
