U.S. Annual Core Consumer Price Growth Unexpectedly Slows In December

(RTTNews) - While the Labor Department released a closely watched report on Wednesday showing U.S. consumer prices increased by slightly more than expected in the month of December, the report also showed an unexpected slowdown by the annual rate of core consumer price growth.

The Labor Department said its consumer price index climbed by 0.4 percent in December after rising by 0.3 percent in November. Economists had expected consumer prices to rise by another 0.3 percent.

The report also said the annual rate of growth by consumer prices accelerated to 2.9 percent in December from 2.7 percent in November, in line with economist estimates.

The slightly bigger than expected monthly increase by consumer prices largely reflected a surge by energy prices, which shot up by 2.6 percent in December after inching up by 0.2 percent in November.

Excluding the jump by energy prices as well as an increase by food prices, core consumer prices crept up by 0.2 percent in December after increasing by 0.3 percent for four straight months. The uptick matched expectations.

The annual rate of growth by core consumer prices slowed to 3.2 percent in December from 3.3 percent in November, while economists had expected yearly growth to remain unchanged.

The modest monthly increase by core consumer prices reflected higher prices for shelter, airline fares, used cars and trucks, new vehicles, motor vehicle insurance, and medical care.

Meanwhile, decreases in prices for personal care, communication, and alcoholic beverages helped limit the upside.

"Today's CPI report is encouraging, but our view is unchanged in that we do not expect a Fed rate cut in the first quarter of 2025," said Larry Tentarelli, Chief Technical Strategist for Blue Chip Daily Trend Report.

"Inflation data remains somewhat sticky and the labor market has been constructively strong," he added. "Based on that, we expect the Fed to stay on hold for the next few months, unless there is a sharp drop off in employment data."

The Labor Department released a separate report on Tuesday showing producer prices in the U.S. rose by slightly less than expected in the month of December.

The Labor Department said its producer price index for final demand crept up by 0.2 percent in December after climbing by 0.4 percent in November. Economists had expected producer prices to rise by 0.3 percent.

The report also said the annual rate of producer price growth accelerated to 3.3 percent in December from 3.0 percent in November. The acceleration matched economist estimates.