US Consumer Prices Rise 0.3% in December, Exceeding Predictions

In the United States, inflation surpassed expectations in December, driven by surges in energy and housing costs, highlighting the ongoing challenge of controlling price pressures in the economy. The Labor Department reported a 0.3% increase in the Consumer Price Index (CPI), a comprehensive measure encompassing the prices of everyday items such as gasoline, groceries, and rent. This exceeded predictions, with prices showing a 3.4% rise from the same period the previous year, surpassing both Refinitiv economists’ expectations and the 3.1% gain noted in November.

Although certain aspects of the report suggested a gradual decline in inflation, core prices, excluding the more volatile food and energy measurements, rose 0.3%, with an annual increase of 3.9%. While these figures slightly exceeded estimates, it marked the first time since May 2021 that core inflation dropped below 4%. The overall picture portrayed by the report is one of persistent inflation, slow to recede despite the Federal Reserve’s decision to raise interest rates to the highest level in two decades.

While inflation has significantly decreased from its peak of 9.1%, it remains well above the Federal Reserve’s 2% target. Seema Shah, Chief Global Strategist at Principal Asset Management, noted that the report underscores the market’s premature enthusiasm regarding the timing of rate cuts, emphasizing that disinflation progress is gradual and unlikely to follow a direct path to the 2% target.