US inflation gains, core prices ease in December

Market: Metals, Natural gas
15/01/25

Headline inflation quickened to an annualized 2.9pc in December from a year earlier but core inflation slowed for the first time since August.

The acceleration in the consumer price index (CPI) last month compared with 2.7pc in November, according to the Labor Department. Analysts surveyed by Trading Economics had forecast gains of 2.9pc.

Core inflation, which excludes volatile food and energy, slowed to an annual 3.2pc from 3.3pc the prior month. It came in under analysts' forecasts of 3.3pc.

Traders raised the probability the Federal Reserve will cut its target rate at the June meeting to about 66pc odds from about 58pc Tuesday, according to CME's FedWatch tool. The Fed in December penciled in two likely quarter-point cuts this year but strong job growth and signs of inflation reigniting have been pushing any likely move back later into the year.

The energy index contracted by an annual 0.5pc in December, compared with a 3.2pc decline in November. The gasoline index fell by 3.4pc last month compared with an 8.1pc decline the prior month. Energy services rose by 3.3pc following a 2.8pc gain in November.

Services less energy services, considered a core services measure, rose by an annual 4.4pc in December after a 4.6pc gain the prior month.

Shelter costs rose by an annual 4.6pc following an annual 4.7pc gain the month prior. Food rose by 2.5pc after a 2.7pc gain.

Transportation services rose by an annual 7.3pc in December.

For the month, the CPI rose by 0.4pc following a 0.3pc gain in November that followed four months of 0.2pc gains. Energy rose by 2.6pc in December from the prior month, accounting for 40pc of the monthly headline gain, after rising by 0.2pc in November. Core inflation slowed to a monthly 0.2pc gain after four months of 0.3pc gains.

By Bob Willis

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