2024 US CPI Forecast Panorama: From Data Codes to Investment Opportunities

One Sentence Summary: The Dilemma of CPI Forecasting

The 2024 US CPI forecast is essentially a “triangle game”—inflation pressures from the US election, geopolitical conflicts disrupting logistics, and the Federal Reserve’s wavering rate cut pace. The result is that CPI remains difficult to bring down completely, and market expectations are constantly being fine-tuned.

Why Is CPI Data So Important?

Many think CPI is just an inflation index, but its significance far exceeds that.

The US CPI is released on the first business day of each month or the closest business day, in two time slots: 20:30 Taiwan time during daylight saving time, 21:30 Taiwan time during standard time. Why does the market pay so much attention? Because CPI is released earlier than the PCE data that the Fed focuses on. Once the Fed sees CPI figures, it begins to adjust policy expectations, influencing market directions and causing fluctuations in major asset prices.

2024 CPI release schedule (Taiwan time):

• Jan 11 21:30 | Feb 13 21:30 | Mar 12 21:30
• Apr 10 20:30 | May 15 20:30 | Jun 12 20:30
• Jul 11 20:30 | Aug 14 20:30 | Sep 11 20:30
• Oct 10 20:30 | Nov 13 21:30 | Dec 11 21:30

CPI, Core CPI, PCE: The Three Brothers’ Differences

CPI vs Core CPI: CPI is a “big basket” that includes everything; food and energy prices cause large swings. Core CPI excludes these two and focuses on relatively stable items like clothing, healthcare, and transportation.

CPI vs PCE: Different calculation methods. CPI uses Laspeyres weighting, PCE uses chain weighting. Simply put, PCE is smarter—when oil prices surge, consumers switch to other energy sources, and PCE automatically adjusts weights, smoothing out fluctuations. This is why the Fed trusts PCE more.

Year-over-year vs Month-over-month: Year-over-year compares to the same period last year, eliminating seasonal effects and better reflecting true price trends. Month-over-month is more sensitive to short-term fluctuations.

Investors mainly focus on two indicators: US CPI YoY (released earliest, market reacts most strongly) and US PCE YoY (basis for Fed decisions).

Composition of US CPI: Which Items Have the Largest Weights?

Major items in the CPI basket:

• Housing and Rent: 30-40% (the main focus)
• Food and Beverages: 13-15%
• Education and Communications: 6-7%
• Energy: 6-8%
• Medical Care: 7-9%
• Transportation: 5-6%
• Others: remaining portion

Housing and food dominate, so CPI forecasts mainly hinge on housing prices and food costs.

Three Major Factors Influencing 2024 CPI Predictions

First Variable: US Election

Candidates in election years tend to overpromise. Coupled with tense geopolitical situations, candidates often shift domestic conflicts outward, accelerating de-globalization, boosting protectionism, raising import prices, and making deflation harder.

Second Variable: Fed Rate Cut Pace

According to CME data, markets expect the Fed to cut rates about 6 times (total 0.75 percentage points) in 2024, reflecting investor belief that CPI will gently decline throughout the year.

Third Variable: Global Logistics Costs

After the Red Sea crisis erupted at the end of 2023, rerouting via Europe and Asia doubled shipping times and costs. Although the impact on container freight rates isn’t as severe as in 2020, regional logistics disruptions still ripple into consumer prices.

Review of the US CPI Cycles Over the Past 30 Years

First Cycle (1990-1991): Savings and Loan crisis + Gulf War → Oil price pressure → Recession → CPI declines

Second Cycle (2000-2001): Dot-com bubble burst + 9/11 → Economic shock → CPI falls

Third Cycle (2008-2009): Subprime mortgage crisis → Financial tsunami → CPI plummets

Fourth Cycle (2020-present): Pandemic shock → Fed’s massive money printing → CPI soared to June 2022 highs → Logistics recovery + pandemic easing → CPI has been declining since

History shows: Global logistics directly impacts US inflation. The 2020 pandemic caused CPI to fall rapidly, then supply chain disruptions pushed it back up. Although the Red Sea crisis isn’t as extreme as the “Ever Given” blocking the Suez Canal, regional logistics costs will eventually be reflected in consumer prices.

2024 CPI Forecast: Three Phases—Bottom, Rebound, and Decline

According to IMF forecasts, global GDP growth in 2024 will be 3.1%, with the US at 2.1% (top-tier globally), indicating resilience in the US economy and that inflation won’t drop too low.

Key drivers:

• In the first half of 2023, crude oil and commodities declined sharply, so CPI in early 2024 won’t continue to fall rapidly like in 2023—due to base effects. Meanwhile, oil inventories are decreasing, supporting oil prices.

Considering the political pressures from elections, geopolitical risks affecting shipping costs, and the Fed’s actual rate cut pace, our CPI forecast for 2024 is:

Bottom in Q1 → Rebound in Q2 → Mild decline in H2

The year will likely form a “U-shape,” not a continuous downward trend.

Underlying Logic: Why Is CPI Forecasting So Difficult?

1. Political cycles plus economic cycles: Election-year policies inherently increase inflationary pressures.
2. Supply chain fragility: Red Sea crises, geopolitical conflicts can at any time severely disrupt logistics.
3. Limited room for Fed policy: If inflation is sticky, rate cuts are constrained.

Investor Takeaways

The uncertainty in CPI forecasts means markets tend to overestimate or underestimate rate cuts. If CPI data “disappoints” (e.g., expected 2.8% but actual 3.2%), markets will sharply adjust valuations of stocks, bonds, and the dollar.

In 2024, key points to monitor:

• Market sentiment before and after monthly CPI releases
• Fed’s stance on inflation stickiness
• Actual impact of geopolitical events on logistics costs

Bottom line: CPI prediction is a probabilistic game; the real profit lies in understanding expectations gaps.