US CPI data for January “hotter than expected”
The US Consumer Price Index (CPI) data [link] for January showed that prices were up 6.4% y/y, and up 0.5% from December. The data suggested “across the board” increases in the costs of food, energy, and especially shelter.
The US Federal Reserve said that it expected the inflationary pressure of the cost of shelter to ease in the second half of the year, but that even when shelter is removed from the data, the resulting “super core” inflation was still up 4.0% y/y and up 0.2% from December.
MB BOTTOM-LINE
Even if the US CPI data showed that inflation was cooling in America, we’d still be left with our ridiculously high inflation data for January which necessitates a BSP response.
But, unfortunately, our inflation is kind of like “super high” in a world of “really high” inflation, and the battle against this inflationary wildfire doesn’t seem to be over yet.
Rates might need to go even higher in the US to contain the problem, which puts pressure on the BSP to keep pace to protect the peso.
What’s really interesting, though, is that the BSP might not even be the most critical component of our fight against inflation.
Rate hikes curb consumption, but it isn’t foolish spending that has driven up the cost of basic food staples in recent months here.
People aren’t running around buying up ridiculous quantities of onions and eggs with the proceeds of low-interest loans.
Raising rates won’t stop people from needing basic necessities to feed themselves.
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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