Prices that consumers pay for a variety of goods and services rose more than expected in December, according to a Labor Department measure Thursday that shows inflation still holding a grip on the U.S. economy.
The consumer price index increased 0.3% for the month, higher than the 0.2% estimate at a time when most economists and policymakers see inflationary pressures easing. On a 12-month basis, the CPI closed 2023 up 3.4%. Economists surveyed by Dow Jones had been looking for respective readings of 0.2% and 3.2%.
Excluding volatile food and energy prices, so-called core CPI also increased 0.3% for the month and 3.9% from a year ago, compared to respective estimates of 0.3% and 3.8%.
Much of the increase came do to rising shelter costs. The category rose 0.5% for the month and accounted for more than half the core CPI increase. On annual basis, shelter costs increased 6.2%, or about two-thirds of the rise in inflation.
Fed officials largely expect shelter costs to decline through the year as renewed leases reflect lower rents.
Stock market futures were negative following the release while Treasury yields held slightly higher.
Food prices increased 0.2% in December, the same as in November. Egg prices surged 8.9% on the month, but were still down 23.8% annually. Energy posted a 0.4% gain after sliding 2.3% in November as gasoline rose 0.2% but natural gas declined 0.4%.
In other key price indexes, motor vehicle insurance bounced 1.5% higher, medical care accelerated by 0.6% and used vehicle prices, a key contributor in the initial inflation surge, increased another 0.5% after being up 1.6% in November.
Wages adjusted for inflation posted a 0.2% gain on the month, while rising a modest 0.8% from a year ago, the Bureau of Labor Statistics said in a separate release.
The inflation readings cover the same month that the Fed held its key borrowing rate steady for the third straight meeting. Along with that decision, policymakers indicated that they could begin cutting rates…
Read the full article here