Numbers: Prices for consumer goods and services (living costs) rose in December, the fastest clip since last summer, as Americans paid more to fill gas tanks.
According to the government, the consumer price index rose 0.4% last month, the highest since August.
Economists surveyed by MarketWatch’ sister magazines Dow Jones and The Wall Street Journal predicted a 0.4% increase.
read: The United States lost 140,000 jobs in December
Still, the pace of inflation over the past year has been fairly low at 1.4%. The annual rate increased from 1.2% in the previous month.
Before the pandemic began last spring, the consumer price index was at a much higher pace of 2.3%.
What happened: About 60% of consumer price inflation last month was related to rising gasoline prices.
Gasoline costs soared seasonally by 8.4% in December, but the actual consumer growth was much smaller.
to see: MarketWatch Coronavirus Recovery Tracker
In any case, gasoline prices are still 15% below the previous year’s levels. During the pandemic, people stay at home and drive less, and fuel demand is less.
Food costs (food and eating out) increased 0.4% last month.
Excluding gas and food, inflation rose by less than 0.1% in December, based on a less volatile “core” indicator of prices.
Core inflation over the past year has remained unchanged at 1.6% for the third straight month.
Prices for other important consumer goods and services were mixed. For example, rents have risen and clothing prices have skyrocketed, while used car, medical, drug and entertainment prices have all fallen.
read: Restaurant cuts another 372,000 jobs in December
Big picture: Investors are talking about inflation again, but it could fall below 2% until early spring and probably won’t threaten the economy this year or next.
The big question is whether it will reach and stay there at the 2% target of the Federal Reserve. The Federal Reserve Board has stated that it is willing to raise inflation above 2% for some time until the economy returns to normal.
read: The bad news keeps coming for the economy. How bad is it?
What are they saying? Sarguatieri, Senior Economist at BMO Capital Markets, said:
Market reaction: Dow Jones Industrial Average 30 kinds average DJIA,
And S & P 500 SPX,
Set to open lower on Wednesday trading.
CPI will rise 0.4% in December due to rising gas prices in the consumer price index
Source link CPI will rise 0.4% in December due to rising gas prices in the consumer price index