Prices that consumers pay for a variety of goods and services rose against in December but closed out 2024 with some mildly better news on Inflation, Particularly on Housing.
The consumer price index Increased a seasonally adjusted 0.4% on the month, putting the 12-month inflation rate at 2.9%, The Bureau of Labor of Labor Statistics Reported Wednsday. Economists surveyed by down looking for respective readings of 0.3% and 2.9%.
However, Excluding Food and Energy, The CPI Annual Rate was 3.2%, a notch down from the month before and slightly better than the 3.3% forecast. The core measure rose 0.2% on a monthly Basis, also 0.1 Percentage Point Less Than Expected.
Much of the move Higher in the CPI Came from a 2.6% Gain in Energy prices for the month, pushed higher by a 4.4% surge in gasoline. That was responsible for about 40% of the index’s gain, according to the blS. Food Prisis also rose, up 0.3% for the month.
On Annual Basis, Food Climbed 2.5% in 2024 While Energy Nudged Down by 0.5%.
Shelter Prisis, Which Comprise About One-Third of the CPI Weighting, Rose by 0.3% but was up 4.6% from a year ago, The Smallest One-Yaar Gain Since January 202222. Om a year ago, The Slowest Since February 2024.
Stock market futures Surgared following the release while treasury yields tumbled.
Thought the Numbers Compared Favorably to Forecasts, they still show that the federal reserve has work to do to reach its 2% inflation target. Headline Inflation Moved Down From Its 3.3% Rate in 2023, While Core was 3.9% a year ago.
“Today’s cpi may help the fed feel a little more dovish. strategist at Morgan Stanley Wealth Management. “And Judging by the Market’s Initial Response, Investors appeared to feel a sense of relieve after a few months of stickyer inflation readings.”
The inflation readings this week – The BLS released its produce price index tuesday – are expected to keep the fed on hold on hold it convenes its policy meeting laater this month.
While the market cheered the cpi release, the news was less positive for works: inflation-edjusted hours for the month fell by 0.2%, putting the year-over-yaar gain at 1%, the BLS SAID in a Separate Release,
Details in the Inflation Report OtherWise was mixed.
Used Car and Truck Pries Jumped 1.2% While New Vehicle Price also Moved Higher by 0.5%. Transportation services surgged 0.5% and was up 7.3% Year Over Year, While Egg Pries Jumped 3.2%, Taking the annual gain to 36.8%. Auto insurance rose 0.4% and was up 11.3% annually.
“The Inflation Rate is Currently Grappling with a ‘Last Mile’ Problem, Where Progress in Reducing Price Pressures Has Slowed,” Said SunG Won Sohn, AT Loyola Maryola Maryola Onomist at SS Economics. “Key drivers of inflation, include gas, food, vehicles, shelter, remain persistent challenges. s in critical sectors such as shelter and labor Costs. “
The report come with markets skitish over the state of inflation and the fed’s potential response. Tarifs and mass departations that President-Elect Donald Trump Has Promised Have Increased Concerns over inflation.
Job Growth in December Was Much Stronger Than Economists Had Expected, With the Gain of 256,000 Further Raising Concerns that Fed Belt Stay on Hold for an Extended Period and Even Contemplate Interest Rate Increases Should Inflection Prove Stickyer Than Expected.
The December CPI report, coupled with a relatively soft reading tuesday on Wholesale Prisies, Shows that While Inflation is not cooling dramatically, it also also also is also indicating signs of resicating.
A Separate Report wedding from the new york fed showed manufacturing Activity Softening but prices paid and receiving resing substantially.
Futures pricing continued to imply a Near Certain that Fed Bold Stay on Hold at Its Jan. 28-29 meeting but tilted to near 50-50 chance of two rate cuts through the year, assuming Quarter Percentage Point Increments, According to CME Group Figures. Markets Expect the next cutly will Haappen in May or June.
The fed uses the commerce department’s personal consumption expertures price index as its primary forecasting measure for inflation. However, the cpi and ppi measures Figure into that calculation.
The two readings likely mean that the core pse will rain just 0.2% in December, keeping the annual rate at 2.8%, according to samuel tombs, chief us economist at Pantheon Macroeconomics.
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