December Brings Encouraging Signs in Inflation
Core inflation shows signs of deceleration, while shelter costs register their lowest growth rate since 2022.
The Consumer Price Index (CPI) rose by 0.4% in December, aligning with market expectations. Over the past 12 months, headline inflation increased by 2.9%. The Core CPI, which excludes food and energy, showed signs of deceleration with a 0.2% monthly rise, the lowest in four months. On an annual basis, it dropped to 3.2%.
Key components include:
- Energy: Contributed 2.6% to the monthly increase, driven by a 4.4% rise in gasoline prices.
- Food: Prices rose by 0.3% in December, with annual variations of 1.8% for food at home and 3.6% for food away from home.
- Shelter: Increased by 0.3%, marking its smallest annual variation (4.6%) since January 2022.
These figures provide some relief for the Fed, reflecting a slowdown in core prices, which could pave the way for further rate cuts in 2025. For now, the rate is expected to remain between 4.25% and 4.50% at the upcoming January meeting.
Annual Variation (%) of the Consumer Price Index (CPI): General and Core CPI
Source: US Bureau of Labor Statistics
