Blog Price Hikes in Retail Goods Spur U.S. Inflation – and the Fed Is Watching U.S. inflation outpaced consensus estimates for January, likely complicating the policy path for the central bank.
The January U.S. CPI (Consumer Price Index) report indicated a higher pace of inflation than many observers expected. The price level of the core CPI advanced 0.6% month-over-month (m/m), largely driven by price hikes in retail goods. The January CPI report lifts PIMCO’s inflation forecast for year-end 2022; however, we are also lowering our real GDP forecast for the first quarter, since the higher-than-expected inflation coupled with more moderate spending according to our credit card data suggests real consumption likely contracted again in January. Implications for monetary policy While we believe the CPI report increases the probability of the U.S. Federal Reserve hiking its policy rate by 50 basis points (bps) in March, we still think the Fed would prefer to hike sequentially at consecutive meetings instead of making a more abrupt adjustment. Our base case forecast is that the Fed will begin hiking rates at a 25-bps-per-meeting pace in March. Nevertheless, this inflation print will likely make it more challenging for the Fed to push back against market pricing. Price jumps in retail goods Household furnishings, apparel, and recreational goods all saw notable price jumps in January as retailers passed on higher input costs. Interestingly, these continued price hikes took place following larger inventory accumulations and higher trade flows in the fourth quarter of 2021 – both indicators that production bottlenecks are easing. Furthermore, volumes do appear to be reacting to the higher prices, with real goods spending likely once again contracting in January, after contracting a total of 4% over the two months ending in December. The combination of CPI data, retail sales data, and retail sales forecasts (based on credit card data) suggests that the ability to pass on further price adjustments may be waning. On balance, these trends suggest that inflation should begin to moderate, although the path is unlikely to be smooth. Other categories: autos, shelter, travel Elsewhere, auto inflation did moderate as expected, with new car prices reportedly flat in January, and used car prices up 1.5% – in line with the wholesale data, after adjusting for the two-month retail-to-wholesale lag. Wholesale data suggest that used car prices will begin to contract in March, as inventories appear to have recovered. Furthermore, given lower expected tax refund payments (largely due to changes in the child tax credit), auto markets are likely to get some needed reprieve from the typical demand jump around tax season. Turning to services categories, owners’ equivalent rent (OER) inflation was in line with consensus expectations (+0.4% m/m), and although rents were a bit firmer than expected (+0.5% m/m), this was on the heels of a slightly weaker print from December. Overall, shelter (excluding hotels) still appears poised to reach 5%–5.5% inflation overall in 2022. Meanwhile, travel services prices were mixed, with lodging down (−3.9% m/m) and airfares up (+2.3% m/m). The airfares inflation was a notable aberration from the recent pattern of price declines coinciding with new waves in COVID-19 cases. Other recreation services prices were also up, despite the omicron outbreak, but this appears to be a catch-up to trend after two months of contraction. Visit PIMCO’s inflation page for further insights into the inflation outlook and investment implications. Tiffany Wilding is an economist focusing on North America and a regular contributor to the PIMCO Blog.
Blog 長期経済展望の要点：レジリエンスを求めて 景気サイクルの短期化、ボラティリティの上昇、政策対応の縮小を踏まえると、利回り追求よりもポートフォリオのレジリエンス（強靭性）が重視される必要があるでしょう。
Secular Outlook レジリエンスを求めて 今後5年間で、ほとんどの債券ベンチマークでプラスのリターンが見込まれます。債券は、より高い利回り水準となり、分散型ポートフォリオにレジリエンスを構築する上で重要な役割を果たすとみています。
Blog 歴史的な市場の動きを受けて、債券の見通しは改善 年初来の利回り急騰は、特に景気後退の可能性が高まる中で、債券市場の価値を回復させています。ただ、市場モメンタムがいつ反転するかについては依然として不透明です。
Strategy Spotlight PIMCOインカム戦略アップデート：今後の投資機会 利回りの上昇、スプレッド拡大、市場ボラティリティの高まりで環境は魅力的になりつつありますが、クレジットの選択には慎重さが求められます。
Blog Substantial Further Progress? Not Yet, Says the Fed The U.S. Fed stopped short of providing “advance notice,” but a December tapering announcement remains likely.
Blog Supply Chain Crisis: Disruption Should Lead to Greater Diversification Supply chains set to become less dependent on China over time.