However, once you strip out rent — which is what the Fed has told us they want to focus on because of the lag in rent data — the growth rate of inflation is falling more noticeably. The Fed is focused on core service inflation less shelter. If you take CPI data in total and subtract the shelter data, inflation data has collapsed.

90% of the inflation growth came from the shelter data, which we know needs to catch up to the reality that the data line below is much lower in real terms.

How can this lead to a 2024 pivot if we don’t have a job-loss recession? This is a good question, as

Has the recent inflation data given the Federal Reserve a pathway for a 2024 pivot? The Fed has whispered about what can happen if the inflation growth rate falls more into 2024 and it’s a positive take. Some have thought the Fed would need to keep the fed funds rate elevated for years until they see 2% core PCE data. However, I believe there could be another path for 2024. 

First, let’s look at today’s CPI inflation data. It came in a bit lighter than expected — no real surprise here.

From BLS: The Consumer Price Index for All details ⇒