As we mentioned last week, the Consumer Price Inflation (CPI) data was released for December, as well as the small business outlook which no doubt is heavily influenced by the inflation stats. Let's get into it.
CPI, which tracks consumer-level inflation, showed a decrease of 0.1% in December and 0.6% annually. Our preferred measure, Core CPI, which strips out food and energy prices, rose in December but showed an annual decrease of 0.3%. Shelter costs, which rose in December, played a major role in the increased Core CPI, as it makes up almost 40% of the data. It is important to note that the shelter costs lag a bit and real-time data shows that they have been decreasing, so this should help bring down the inflation numbers in future reports.
The good news is, if the trend continues, we'll likely make actual progress toward the Fed's goal of lowering inflation to 2%. Time will tell.
In small-business news, the National Federation of Independent Business (NFIB) released its Small Business Optimism Index for December, and it was the lowest reading since last June. Coming in at 89.8, the key takeaway from the report was that inflation continues to be the biggest problem for businesses.
This week, we’ll be looking at some very important housing and inflation data. The Housing Market Index, Housing Starts and Building Permits, and Existing Home Sales data will provide a good look at the current and future housing market. The Producer Price Index will also provide insight to December’s wholesale inflation numbers. Stay tuned for next week’s breakdown!
