The Labor Department's latest report on Wednesday revealed a slightly higher than anticipated rise in U.S. consumer prices for December, while also highlighting an unexpected deceleration in the annual growth rate of core consumer prices. According to the report, the consumer price index advanced by 0.4% in December, following a 0.3% increase in November, surpassing economists' predictions of another 0.3% rise.
Moreover, the annual growth rate of consumer prices climbed to 2.9% in December from 2.7% in November, aligning with expert forecasts. The slightly larger-than-expected increase in monthly consumer prices was primarily driven by a significant 2.6% surge in energy prices, which had previously edged up by 0.2% in November.
Excluding volatile food and energy prices, core consumer prices edged up by 0.2% in December, consistent with expectations, following a consistent 0.3% increase over the prior four months. However, the annual growth rate for core consumer prices decelerated to 3.2% in December from 3.3% in the previous month, contrary to economist expectations of stability.
This modest monthly uptick in core consumer prices was influenced by higher costs in sectors such as shelter, airline fares, used cars and trucks, new vehicles, motor vehicle insurance, and medical care. Conversely, declines in the prices of personal care, communication, and alcoholic beverages helped to keep the increase in check.
"Today's CPI report is a positive sign, but our position remains unchanged; we do not foresee a Federal Reserve rate cut in the first quarter of 2025," stated Larry Tentarelli, Chief Technical Strategist at Blue Chip Daily Trend Report. He further commented, "Inflation data remains somewhat resilient, and the labor market shows constructive strength. Based on this, we anticipate the Fed maintaining its current stance for the upcoming months, barring a significant downturn in employment figures."
Additionally, the Labor Department's separate report on Tuesday indicated that producer prices in the U.S. rose less than expected for December. The producer price index for final demand increased by 0.2%, following a 0.4% rise in November, while economists had projected a 0.3% hike. The annual growth rate for producer prices accelerated to 3.3% in December from 3.0% in November, meeting economists’ forecasts.
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