

Core U.S. consumer prices rose less than predicted in December, reinforcing hopes that inflation is tempering as the Federal Reserve contemplates its next move on interest rates. Excluding volatile food and energy prices, the consumer price index showed a seasonally adjusted 0.2% gain on a monthly basis and 2.6% annually, the Bureau of Labor Statistics reported Tuesday. Both were 0.1 percentage point below expectations. Though they look at both measures, Fed officials consider core inflation a better long-run gauge of where inflation is heading.
On a headline basis, the CPI posted an increase of 0.3% for the month, putting the all-items annual rate at 2.7%. Both were exactly in line with the Dow Jones consensus estimate. The Fed targets inflation at 2% annually, so the report provides some evidence that the pace of price increases is moving back to target but remains elevated. Stock market futures briefly rose following the report while Treasury yields were lower. Traders kept bets intact that the Fed would stand pat at its meeting later this month and likely won’t be considering another cut until June, according to the CME Group’s FedWatch gauge.
Source: CNBC
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