2024.01.1113:45:00UTC+00U.S. Consumer Prices Rise 0.3% In December, Slightly More Than Expected

Partly reflecting a continued increase in shelter prices, the Labor Department released a report on Thursday showing consumer prices in the U.S. rose by slightly more than expected in the month of December.

The Labor Department said its consumer price index climbed by 0.3 percent in December after inching up by 0.1 percent in November. Economists had expected consumer prices to rise by 0.2 percent.

While prices rose by slightly more than anticipated, Commerzbank Senior Economists Dr. Christoph Balz and Bernd Weidensteiner said the increase "does little to change the gradual downward trend in inflation."

"What is important for the Federal Reserve is that the last mile in bringing inflation back to target appears to be more difficult," said Balz and Weidensteiner. "We therefore feel confirmed in our assessment that the Fed will not cut interest rates in March, as the market expects, but only in May."

Shelter prices increased by 0.5 percent during the month, contributing over half of the advance by the consumer price index.

The report said energy prices also rose by 0.4 percent, as increases in prices for electricity and gasoline more than offset a decrease in prices for natural gas, while prices for food edged up by 0.2 percent.

Excluding food and energy prices, core consumer prices still climbed by 0.3 percent in December, matching the increase seen in November as well as economist estimates.

The core price growth reflected the increase in shelter prices as well as higher prices for motor vehicle insurance and medical care.

Meanwhile, prices for household furnishings and operations and personal care were among those that decreased over the month.

The report also showed the annual rate of consumer price growth accelerated to 3.4 percent in December from 3.1 percent in November. The annual rate of growth was expected to tick up to 3.2 percent.

At the same time, the annual rate of growth by core consumer prices slowed to 3.9 percent in December from 4.0 percent in November. Economists had expected the pace of core price growth to decelerate to 3.8 percent.

On Friday, the Labor Department is scheduled to release a separate report on producer price inflation in the month of December.

Economists currently expected producer prices to inch up by 0.1 percent in December after coming in unchanged in November, while the annual rate of growth is expected to accelerate to 1.3 percent from 0.9 percent.