##s that may embed opaque, concentrated climate - related risks. sudden realizations of climate - related risks could cause rapid shifts in investor sentiment and shocks to asset prices, including to real estate prices in specific geographic locations. 15 federal, state, and local authorities are implementing policies to support transparency in climate - related risk associated with real estate to allow property owners, lenders, and investors to make better - informed investment decisions. updated flood maps, coastal resilience programs, and managed retreat from flood - prone areas can see, for example, christopher flavelle ( 2019 ), “ as wildfires get worse, insurers pull back from riskiest areas, ” new york times, august 20 ; and matt sheehan ( 2020 ), “ renre could pull back in florida if rates stay low, says ceo, ” reinsurance news, february 7. the federal housing finance authority recently issued a request for input on natural disaster risk to the housing finance system ; see federal housing finance agency ( 2021 ), “ fhfa issues rfi on climate and natural disaster risk management at the regulated entities, ” news release, january 19, https : / / www. fhfa. gov / media / publicaffairs / pages / fhfa - issues - rfi - on - climate - and - natural - disasterrisk - management - at - the - regulated - entities. aspx. - 8reduce the extent of hidden climate risks. while such transparency is vital, financial system vulnerabilities could arise even in transparent markets — for example, through aggregate common exposures to climate risk. finally, climate - related physical risks are increasing financial burdens on local, state, and federal finances. increasing physical damage to localities necessitates higher expenditures to repair damage from extreme weather and fire events and to build resilience to growing climate threats. pullbacks in insurance coverage, the need to relocate or bolster infrastructure, and increased provision of service in the wake of disasters increase burdens on state, local, and federal finances. these rising burdens could place strains on municipal financing markets over time, particularly in areas of geographically concentrated climate risks, and create some risk of a cascade effect if a shock causes investors to pull back from similar exposures. new approaches and new tools we are building the requisite institutional capacity and knowledge to deepen our understanding of these risks and vulnerabilities. the new fscc is a systemwide committee

5. 7 percent, from 6 percent in november and a peak of 6. 6 percent in september. over the past three months, core cpi inflation has run at an annualized rate of 3. 1 percent, a noticeable drop from earlier in 2022. another encouraging sign is that higher inflation was less concentrated - the share of categories of different goods and services with inflation over 3 percent has declined in the past several months, from almost three fourths in early 2022 to less than one half in december. that's good news because it indicates that broader inflationary pressure across the economy is easing. now, here's why i am cautious about these latest results and why i am not ready yet to substantially alter my outlook for inflation. month - over - month core cpi inflation actually ticked up in december from november and is pretty much where it was in october and where it was in march when we began raising interest rates. although inflation measured over 12 months has been falling, december's reading is still close to where it was a year ago. core inflation was 6 percent year over year ( yoy ) in january 2022 and was 5. 7 percent yoy last month. thus, it basically moved sideways all year. so, while it is possible to take a month or three months of data and paint a rosy picture, i caution against doing so. the shorter the trend, the larger the grain of salt when swallowing a story about the future. back in 2021, we saw three consecutive months of relatively low readings of core inflation before it jumped back up. we do not want to be head - faked. i will be looking for the recent improvement in headline and core inflation to continue. wages, as i indicated earlier, are another stream of data that i will be watching for evidence of continued progress to help ease overall inflation. though recent hourly earnings data are a positive development, i need to see more evidence of wage moderation to sustainable levels. the federal reserve bank of atlanta's wage growth tracker has been running higher lately and has moderated less. the employment cost index for december won't be out until the end of this month. over time, we need to see wages grow more in line with productivity growth plus 2 percentage points, consistent with the fomc's inflation target. those are reasons that i am cautious about the recent good news, but it is good news. we have made progress. six months ago, when inflation was escalating and