RBC: US CPI is expected to fall below 3% for the first time in nearly three years

Royal Bank of Canada (RBC) pointed out that we expect the annual rate of US headline CPI to fall below 3% for the first time in nearly three years (since March 2021) in January. The expected slowdown is mainly due to a pullback in energy prices and another decline in food price growth. Core CPI growth, which excludes food and energy products, should slow a bit – we expect y/y growth to slow to 3.8% in January from 3.9% in December. But a disproportionate part of this increase is still coming from higher rents. The growth of housing costs will continue to slow as lower market rents gradually affect rentals. Commodity price growth has fallen back to around zero as the impact of earlier severe global supply chain disruptions has eased.