US Dec'24 CPI Preview: Below is our preview of US Dec'24 CPI data due for release on 15th Jan:1. Our expectations for Dec'24 are for headline CPI (+0.40% vs. +0.31% previously) & for for core (+0.27% vs. +0.31% previously). 

2. Core CPI at 0.27% will imply a 5th straight month of above 2.5% reading. Effectively the disinflation narrative has stalled. 

3. The major contributor to the CPI print will be rents. We expect both primary (+0.29% vs +0.21%) and owners' equivalent rent (+0.37% vs. +0.23%) to tick up from the November data. 

4. We expect super core inflation moderated slightly to 0.28% m-o-m in December from 0.342% in November. 

5. Separately, the University of Michigan’s long-term inflation expectations jumped to 3.3% in January from 3.0% in December, the highest since June 2008. Short-term inflation expectations (which tends to be more volatile) also rose sharply to 3.3% in January from 2.8% in December. 

6. The disinflation narrative has effectively stalled both in terms of actual inflation nos as well as inflation expectations. And this has happened even before any actual tariff increases. 

7. This does not bode well for Fed Chair’s Powell’s hollow confidence in disinflation via using new innovative ways of looking at inflation. Higher for longer narrative has returned & is unlikely to go away soon. We don’t expect any cuts from Fed in H1CY25 at least.