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The
Labor Department said on Tuesday its consumer price index
increased 0.2% last month after climbing 0.3% in November. The
monthly increase in the CPI has been slowing since jumping 0.4%
in October. In the 12 months through December, the CPI rose 2.3%
after gaining 2.1% in the 12 months through November.
Economists polled by Reuters had forecast the CPI would rise
0.3% in December and advance 2.3% on a year-on-year basis.
Excluding the volatile food and energy components, the CPI edged
up 0.1% after gaining 0.2% in November. The so-called core CPI
was up by an unrounded 0.1133% last month compared to 0.2298% in
November.
Underlying inflation in December was held back by declines in
the costs of used cars and trucks, airline tickets and household
furnishing and operations, which offset increases in the prices
of healthcare, apparel, new motor vehicles, recreation, and
motor vehicle insurance.
In the 12 months through December, the core CPI increased 2.3%,
the largest gain since October 2018, after rising 2.3% in
November.
The Fed tracks the core personal consumption expenditures (PCE)
price index for its 2.0% inflation target. The core PCE price
index rose 1.6% on a year-on-year basis in November. It
undershot its target in the first 11 months of 2019. December
PCE price data will be published later this month.
The U.S. central bank last month left interest rates steady and
signaled monetary policy could remain on hold this year after it
reduced borrowing costs three times in 2019.
Minutes of the Fed's Dec. 10-11 meeting published early this
month showed policymakers generally expected inflation would
eventually hit the central bank's target as the economy
continued to expand and resource utilization remained high.
There were, however, concerns among some officials "that global
or technology-related factors were exerting downward pressure on
inflation that could be difficult to overcome."
Moderate inflation was underscored by last week's employment
report, which showed the increase in annual wage growth
retreating below 3.0% in December, despite the unemployment rate
holding at near a 50-year low of 3.5% and a broader measure of
labor market slack dropping to a record 6.7%.
In December, gasoline prices advanced 2.8% after rising 1.1% in
November. Food prices gained 0.2% after edging up 0.1% in
November. Food consumed at home ticked up 0.1%.
Owners' equivalent rent of primary residence, which is what a
homeowner would pay to rent or receive from renting a home,
increased 0.2% for a third straight month.
Healthcare costs jumped 0.6% in December after rising 0.3% in
the prior month. Apparel prices increased 0.4% after nudging up
0.1% in November. New vehicle prices rebounded 0.1% after
declining for five straight months.
Prices for used motor vehicles and trucks dropped 0.8% last
month after increasing 0.6% in November.
(Reporting by Lucia Mutikani Editing by Paul Simao)
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