Analysts commented over the weekend that with consumer prices continuing to rise over the past month at an alarming rate, the Federal Reserve’s battle against inflation is not yet over. January’s consumer price index, which is set to be reported on Tuesday, is expected to increase 0.5% from the previous month. This would mark the largest gain in three months.
While inflation is moderating after hitting a four-decade high last year, experts maintain that the Federal Reserve will need to persist with its tight fiscal policy in order to beat down the persistent rise in price pressure.
One positive development is the price cooldown of core goods in the final quarter of 2022, which looks set to persist in the new year. Morgan Stanley economists, led by Ellen Zentner, view this as a positive sign going forward.
“With less of a drag from core goods, core inflation should tick higher in the upcoming release,” a report from Morgan Stanley economists read. “But given that goods prices are not increasing meaningfully from here, price pressures should remain below the peaks of the summer and fall.”