As US inflation persists in 2022 at levels not seen since the 1980s, the US Inflation Tracker captures the trends that provide context in today’s economy. There may be some relief in sight.

Used Car Prices: From Headwind to Tailwind
We’ve heard quite a bit from retailers about bloated inventories as consumers are shifting from purchasing goods to services. And while much of the survey data pointed to an imminent decline in prices, the hard data seemed to be lagging behind. That payback may finally be apparent.

With supply chains easing, durable goods and commodities have experienced an increase in inventories. We are finally seeing disinflation, if not deflation, in some of these key categories. Used car prices are finally deflating and should continue to do so over the coming months.

Manheim Used Vehicle Index vs. Used Cars and Trucks CPI (12/31/15–10/31/22)
Manheim Used Vehicle Index vs. Used Cars and Trucks CPI (12/31/15–10/31/22)
Source: Natixis Investment Managers Solutions, Bloomberg.

Declining Health Insurance Prices Will Continue to Help
The cost of medical health insurance has reversed course after posting 12 consecutive months of increases. Due to its calculation methodology (using an indirect approach based on retained earnings from insurance providers), the recalibration of this input should result in a persistent decrease over the next 12 months.

The data is updated once a year by the National Association of Insurance Commissioners, usually around September or October. As such, the yearly release of the data means it has a substantial lag, and will be heavily influenced by base effects from the previous year.

To run through the numbers: health insurance dropped -4.0% versus the previous month. The category carries a weight of just 0.918% in the CPI (Consumer Price Index) basket. Thus, health insurance contributed -3.68 basis points to headline inflation. It may seem small, but when this number is annualized, the drop in health insurance becomes roughly -40% over the next 12 months. That’s worth 40 basis points off the year-on-year headline CPI print. On a year-over-year headline CPI print of +7.7%, it shaves off 0.40% – not insignificant.

Health Insurance Contribution to Consumer Price Inflation (1/31/19–10/31/22)
Health Insurance Contribution to Consumer Price Inflation (1/31/19–10/31/22)
Source: Natixis Investment Managers Solutions, Bloomberg.

Resource

US Inflation Tracker – November 2022
This in-depth chart deck highlights historical data related to:
• Personal consumption
• Inflation surprises
• Goods and services
• Base effects and surges
• Supply chain, shipping, and restocking
• Housing market pressures
• Wage pressures
• Inflation expectations


Read Full Presentation

Learn More

Want more information on inflation-fighting strategies?

Contact Us

This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of Natixis Investment Managers, or any of its affiliates. The views and opinions expressed are as of November 14, 2022, and may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted, and actual results may vary.

All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided. Investors should fully understand the risks associated with any investment prior to investing.

CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.

4743857.8.1