new Data A report released by the Bureau of Labor Statistics on Wednesday showed that the main measure of inflation fell for the first time since July.
On a “core” basis, which excludes the more volatile costs of food and gas, the CPI for December rose 0.2% from the previous month, a slowdown from the 0.3% monthly gain in November. On an annual basis, prices increased by 3.2%.
Prior to the December edition, the core CPI had been stuck at a 3.3% annualized rise over the past four months. This was the first time since July that the year-on-year core CPI saw a slowdown in price growth.
This publication is the latest economic data the Fed will consider before its next interest rate decision later this month. Stocks rose in the wake of the report, with the 10-year Treasury yield (^TNX) falling 12 basis points to trade below 4.7%.
Read more: What a Fed rate cut means for bank accounts, CDs, loans and credit cards
“Markets reacted positively this morning for good reason: The Fed is OK with seeing headline CPI rise temporarily if that increase does not spill over to core CPI, which is what happened in December,” said chief economist Raymond James Eugenio. . Aleman wrote in a note Wednesday.
Core consumer prices rose as expected last month. The Consumer Price Index rose 2.9% from a year earlier in December, a slight increase from November’s annual price increase of 2.7%. The annual increase matched economists’ expectations.
The index rose 0.4% from the previous month, ahead of the 0.3% increase seen in November and also on par with economists’ estimates.
Seasonal factors such as rising fuel costs and continued flatness in food inflation kept headline numbers higher.
Core inflation has remained stubbornly high due to rising costs of shelter and services such as insurance and medical care. Used car prices also saw another strong rise for the third month in a row, rising 1.2% in December after a 2% monthly increase in November.
Although inflation slowed, it remained above the Fed’s target of 2% on an annual basis.
“Inflation has not been consistent,” Claudia Saham, chief economist at New Century Advisors and a former Fed economist, told Yahoo Finance’s Morning Briefs show. “It’s been quite mixed, but it’s good to see some progress in the right direction. And I think that’s the biggest part of this. We’ve been in a wait-and-see mode on the inflation front. That’s a critical lot where the Fed lines up.”
Comments are closed, but trackbacks and pingbacks are open.