US CPI (February) - Inflation Still Persists

The latest Feb'23 CPI print came in at +6.0% y-o-y came in as anticipated by the analysts. However, the monthly change of +0.5% m-o-m came in a tad bit higher than the estimated +0.4% m-o-m estimated.

In the coming months, it is unlikely that we see the inflation decelerating because much of the disinflationary force on goods prices have been due to the decline of used vehicle prices, and a data by Manheim showed that the wholesale used-vehicle prices have seen large increase in February - meaning, there is a stronger upward pressure of prices now. We need to see more disinflationary pressure in other categories, else the goods prices will rise and cause the core CPI to increase again.

To make things worse, the cyclical component in the services sector continues to accelerate especially the wages in the labor market. The most recent Jobs Report from the US BLS seem to disagree with our hopes of a labour market cooling.