Input Stories
Inflation Inches Up
Inflation rose slightly more than expected in December (The Wall Street Journal, subscription).
What’s going on: “The consumer price index rose 0.4% in December from November and finished the year up 2.9%.”
- The Federal Reserve has a 2% goal for inflation. Economists polled by the Journal had forecast a monthly increase of 0.3% and a year-over-year rise of 2.9%.
- Much of the rise was due to gas prices, which rose 4.4% from November to December, the largest monthly increase since August 2023.
- The data comes out a day after the release of data on December’s wholesale prices, which rose less than anticipated.
Core CPI: Core CPI, which excludes food and energy prices, increased 0.2% in December and 3.2% on an annual basis.
- Journal-surveyed economists had anticipated gains of 0.3% and 3.3%, respectively.
- The lower-than-expected core reading is due to “softness in prices for goods other than food and energy.”
Services: Prices for services, which account for a larger share of consumer spending, rose 0.3% in December, driven in part by housing and airfare price increases.
What it means: “After recent red-hot data, today’s softer-than-expected core CPI reading should help cool fears of a reacceleration in inflation,” Goldman Sachs Managing Director Tina Adatia told Reuters (subscription).
- “While today’s release is likely insufficient to put a January rate cut back on the table, it strengthens the case that the Fed’s cutting cycle has not yet run its course. With labor market data remaining robust, however, the Fed has scope to be patient and more good inflation data will be required for the Fed to deliver further easing.”