Dec 2024 CPI Estimate

Tomorrow at 8:30 am ET we will get the Dec CPI. CPI is one of the 2 most important macro prints each month and this month's CPI is marginally more important after the Fed got more sensitive to inflation over the past few weeks. Even the market is now focused more on the CPI than perhaps in some prior months. A pause by the Fed this month is pretty much baked in but Dec CPI will still be important for the market to understand whether the Fed’s pause, if we get it, will be temporary or a more permanent one.

My average error for estimating headline CPI (based on the last 22 CPI estimates from Feb 2023 - Nov 2024) is extremely low at -2 bps (-0.02 pp).

More importantly, my headline CPI estimates have been closer to the actual number than the average Wall Street estimates by 2 bps on average, 13 times in the last 18 months or 72% of the time.

My average error for estimating core CPI (based on the last 22 core CPI estimates from Feb 2023 - Nov 2024) is also extremely low at -2 bps (-0.02 pp).

My core CPI estimates have been closer to the actual number than the average Wall Street estimates by 1 bps on average, 12 times in the last 18 months or 67% of the time.

For public links to my prior month's CPI estimates, go to ArkominaResearch.com.

In Oct and Nov headline CPI went up from +2.44% YoY to +2.72% YoY. Nov was up +0.31% MoM was the first month in 7 that didn’t have +0.2% MoM or lower reads. Core CPI went up in 3 months Aug-Oct from +3.17% YoY to +3.33% YoY but then managed to improve, albeit only marginally, in Nov to +3.32% YoY. Core CPI went up +0.28% MoM in Nov and didn’t have sub-0.3% MoM reads for 4 months. The biggest question on everyone’s mind is - will headline and core CPI finally improve this month or they will continue to drift higher?

My Dec CPI estimates are…

The same as the current consensus estimates. These estimates were first published in Marko’s CPI Report a few days ago and at the time consensus headline CPI estimates were +2.8% but have in the meantime adjusted to +2.9%.

• Headline CPI

  • +0.3% MoM

  • +2.9% YoY

• Core CPI

  • +0.2% MoM

  • +3.3% YoY

My unrounded estimates:

These numbers will most likely fortify the Fed’s decision to pause this month. However, what happens in Mar and later will depend on more months of inflation and labor market data.

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If you’re interested in learning my longer-term CPI estimates (until Q3 2025), consider subscribing to Marko’s CPI Report which goes out each month before CPI and, among other things, contains analyses of:

1. Forward-looking inflation indicators

2. Detailed Dec CPI estimate

3. Headline and core CPI trajectory until the end of Q3 2025

4. Preliminary Jan CPI estimate

To get Marko’s CPI Report, make sure to subscribe to Arkomina Research Pro Investor at this link: ArkominaResearch.com/Subscriptions/

By subscribing to Pro Investor you also get:

1. Marko’s Fed report that goes out before each Fed meeting and, among other things, contains a detailed analysis of the economy and what type of landing we are in, an analysis of monetary policy lags, what will the Fed likely do in 2024, and 2025, headline and core PCE inflation trajectory and unemployment rate trajectory

2. Marko’s Brain Daily which goes out each trading day contains analyses of all relevant macro indicators and events (such as Fed speeches and Fed meetings) from the prior day, my estimates for all important macro indicators coming out that day, and how the market may react to each scenario, as well as my view of the equity and bond market short-term direction, earnings analyses and much more

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