Last week's US inflation release provided both good news and bad news. The good news was that headline inflation fell from an annual rate of 8.5% to 8.3% and core inflation fell from 6.5% to 6.2%. The bad news was that these prints were still hotter than investors had expected. The decline in used vehicle prices helped core goods inflation lower, yet services inflation picked up sharply as demand transitions away from the goods sector. This uptick in some of the "stickier" parts of the inflation basket will be somewhat of a concern to the US Federal Reserve (Fed). Provided that inflation continues to moderate, a little less tough talking from central bankers may help to ease investors' recent nerves. Yet the Fed will be looking for much more than one month's data before policymakers signal more confidence that inflation is cooling.

US inflation remains high but has edged lower

US CPI inflation by type, % change year on year