Prudential Financial, Inc. (PRU)

Daily Spotlight: Inflation Continues Downward TrekInflation pressures eased again last month in the U.S., continuing a downward trend that began last summer, according to the Consumer Price Index report released Thursday. The Bureau of Labor Statistics reported a 6.5% increase in overall inflation year-over-year through December, compared to a 7.1% rate through November and a 9.1% rate back in June. The core rate, excluding the impact of food and energy prices, also declined -- to 5.7% in December, versus 6.0% in the prior month. The consensus forecasts had called for a 6.7% inflation rate and a 5.6% core rate. The overall rate primarily benefited from falling energy prices (down 4.5% month-over-month), as well as from lower prices for new and used cars and commodities. The increase in transportation prices was moderate at 0.2%. But food and shelter inflation trends remained elevated (up 10.4% and 7.5% year-over-year, respectively) and energy services prices increased 1.5% month-to-month. Looking ahead, we continue to think that the July 9.1% CPI rate will prove to be the peak reading for the index this cycle, as the housing market cools, supplies of new vehicles are replenished, and the price of oil stays below $90 per barrel. Even so, the Federal Reserve still has wood to chop in order to bring core inflation down to its target of 2.0%. The Fed's last rate hike in December was a 50-basis-point increase. We think the central bank will slow the pace to 25 basis points at its meeting this month, and follow with two more 25-basis-point increases in 1H23.