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Friday, April 12th, 2024   Categories: ,

US core CPI will be above 3% in 2024 and for much of 2025

Our standard probability approach suggests that the probability of US core CPI falling below 3% in 2024 – let alone down to 2% – is effectively zero. We think the central point of the forecast range should be between 3.5-4.0%. There parts of the US economy which are exhibiting disinflationary trends, but the cost of shelter, especially Owners’ Equivalent Rent, is likely to remain elevated for several quarters. The Fed needs a major policy rethink about how it manages market expectations on the outlook for core CPI, and on how it addresses the rising cost of home ownership in its overall policy mix.

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