Gasoline pushes U.S. consumer prices higher in December
By Mutikani Lucia
WASHINGTON (Reuters) — US consumption rates rose slowly in december as energy costs surged. But inflation stayed low as the economy faced a raging COVID 19 pandemic in the labor and services sectors. WASHINGTON (Reuters)
Labor said on Wednesday that its consumer price index rose 0.4% last month after 0.2% in November.
An 8.4% rise in fuel prices accounted for over 60% of the CPI increase.
In the 12 months to December, the CPI rose 1,4% following a rise of 1,2% in November.
The CPI readings last month were consistent with economists' forecasts.
The CPI increased 1.4% in 2020.
This was the lowest annual increase since 2015 which was down 2.3 percent in 2019.
Over the last 10 years, the CPI rose at an average annual rate of 1.7 percent.
With the exception of the volatile food and energy elements, the CPI rose by 0.1% after increasing by 0.2% in November.
Drops in the costs of used cars and vans, recreation, airfares and healthcare have reduced the so-called CPI.
The core CPI rose by 1.6 percent year-on-year, contributing to the November improvement.
After rising 2.3% in 2019, it rose 1,6% in 2020.
That was below the average annual rate of 2.0 percent over the past 10 years.
Futures of the U.S. stock exchange is flat.
The dollar went up against a money basket.
The rates of the treasury were higher.
The services industry, covering over two-thirds of the US economy, has been most severely affected by the outbreak.
The Federal Reserve watches the main PCE price index for its 2% inflation target, the flexible average.
The central price index of the PCE is 1.4%.
Economists remain split on this year's inflation forecast.
Some claim inflation would be in violation of its goal by raising about $900 billion further government-approved pandemics by the new Joe Biden administration and the Democratically Governed Congress.
Next Wednesday, Biden will be sworn.
Indeed, in expectation of faster economic growth in the second half of the year, US treasury returns have improved.
A survey this month found that prices charged by producers soared to their highest level since May 2018 in December, presumably representing the bottlenecks in the virus supply chain.
Yet some expect market pressures to be benign, claiming that producers have little flexibility to distribute the increased cost of manufacturing to customers, with at least 19 million American unemployed.
Stress on the job market is often seen as a decline in pay increases, whereas high rental vacancies are expected to mitigate leasing inflation.
Nonetheless, both accept that inflation will increase year-on-year in the next few months as the slow readings of the coronavirus in March, April and May fall out.
The price of fuel bounced back 8.4 percent in December after two successive monthly declines.
Food prices increased by 0.4% after slipping by 0.1% in November.
The cost of homemade food rose by 0.4%.
Food prices eaten outside the home also increased by 0.4% with full service meals gaining by 0.3%.
The owner's equal primary residence rent, which will be charged to rent or to rent out a house, went up 0.1 percent in November.
Most renters have agreed with owners forbearance arrangements.
Consumers tended to spend less for medical treatment and rates declined by 0.2 percent in November after decreasing by 0.1 percent.
Used car and truck rates plummeted 1.2 percent, which declined for the third straight month.
The rate of airline tickets has fallen by 2.3%.
Hotel and motel lodging rates have been stagnant.
But the price of new motor vehicles has risen by 0.4%.
Apparel prices rose by 1.4%.
Prices for home furnishings, personal care items and motor vehicle insurance have also risen.
(Lucia Mutikani's report; Alison Williams and Andrea Ricci's editing)