According to the data released today by the U.S. Bureau of Labor Statistics, the U.S. CPI rose 1.4% year-over-year in December, higher than market expectations of 1.3%; the chain rose 0.4%, unchanged from expectations, maintaining growth for the seventh consecutive month.
In addition, the U.S. core CPI rose 1.6% year-on-year in December, the same as market expectations, and rose 0.1% from a year earlier.
The main driver of inflation for the month originated from goods as the pace of service cost increases slowed rapidly.
As used car prices fell, the energy price index soared. The used car and truck price index is now down for the third consecutive month and fell 1.2% in December.
Despite this month’s big increase, the energy price index has fallen 7.0 percent over the past 12 months.
In particular, the fuel oil price index fell 20.0 percent and the gasoline price index fell 15.2 percent. However, the energy services price index increased over the past 12 months, with the natural gas index increasing 4.1% and the electricity index increasing 2.2%.
The food price index increased 3.9 percent over the past 12 months. All six major grocery store food indexes increased during this period.
The fastest-growing were the meat, poultry, fish and eggs index, up 4.6 percent, and the beef index, up 5.3 percent; the smallest increases were in the cereals, baked goods and fruits and vegetables indexes, both up 3.2 percent over the past 12 months; and the restaurant price index, up 3.9 percent.
Notably, the housing price and rental price indexes are slowing sharply: the housing price index increased 1.84% year-over-year, the lowest since November 2011; the rental price index increased 2.28% year-over-year, the lowest since October 2011.
According to the BLS, even if home prices soar 8% (a 7-year high), the housing price index will still be at a 10-year low.
Analysts believe that core inflation cooled in December in the U.S. as weak labor markets and low demand curbed inflationary pressures. the core consumer price index excluding food and energy rose 0.1% in December from a year earlier, down from a 0.2% increase in November. The headline CPI rose 0.4% in December from November and 1.4% from December 2019, driven by higher gasoline prices. The market is focused on CPI data for the period from March to June, when the base effect will have a greater impact.
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