.HOMECONTACT | NEWS

Jan 12, 1:04 PM EST

Core inflation posted 0.3 percent increase in December, the biggest rise in 11 months


AP Photo
AP Photo/Lynne Sladky

Multimedia
A district summary of the Beige Book
Measuring economic stress by county nationwide
Mall malaise: shoppers browse, but don't buy
Unemployment by the numbers
Family struggles with father's unemployment
Saying an affordable goodbye
Hard times hit small car dealer
Latest Economic News
Europe's recovery just keeps rolling, raising the question of exactly when the European Central Bank will end its extraordinary stimulus efforts

The Bank of Japan has opted to keep intact its unprecedented monetary stimulus despite stronger than expected growth

IMF upgrades outlook for global growth in 2017 to 3.7 percent, best since 2011

Economists say a lengthy government shutdown could hurt economy, but a short one would be just 'a blip'

Top financial officials in Puerto Rico offered a peek Friday into why the U.S. territory is mired in an 11-year recession as a federal control board demanded more transparency and information about the island's finances

Official figures show that retail sales in Britain in the crucial month of December sank by far more than anticipated in the markets

China's economy expanded at a 6.9 percent pace in 2017, faster than expected and the first annual increase in seven years

One year later, Trump claims credit for what is still mostly Obama's economy

President Vladimir Putin's economic adviser says the government is considering a possible boost in social spending

Europe is getting a new economic team in a complex and politically fraught game of musical chairs that will help determine the balance between austerity and spending, tight money and more central bank stimulus.

WASHINGTON (AP) -- Overall U.S. consumer prices rose a scant 0.1 percent in December, slowed by falling energy prices. But a closely watched gauge called core inflation - which excludes the volatile categories of food and energy - surged 0.3 percent, the most in 11 months.

The rise in core inflation grabbed attention in financial markets, where investors have been sending bond yields up in recent days out of concern that rising inflation may prompt the Federal Reserve to accelerate the pace of its interest rate hikes. The yield on the two-year Treasury note surpassed 2 percent for the first time since the peak of the financial crisis in late 2008 after the inflation report was released Friday by the Labor Department.

The 0.3 percent seasonally adjusted jump in core inflation was the biggest since an identical increase in January 2017. Over the past six months, core inflation has recorded more benign monthly readings of 0.1 percent or 0.2 percent.

Paul Ashworth, chief U.S. economist at Capital Economics, said the inflation report bolstered his view that the Fed will accelerate rate increases this year. He said he expected the next rate hike to occur in March, with a total of four increases coming this year as inflation strengthens. Last year, the Fed raised its key short-term rate three times.

The Fed has been trying, so far unsuccessfully, to increase average annual inflation to its target rate of 2 percent. At the same time, the Fed has taken care not to raise rates too quickly out of concern that doing so could derail a steady but slow-growing economy.

"Once spring comes around ... the big declines in components like wireless telephone services will drop out of the annual calculation, and the core inflation rate will rebound well above 2 percent," Ashworth said.

The slight 0.1 percent rise in overall inflation in December followed a 0.4 increase in November, with both readings heavily influenced by a swing in energy prices. Over the past 12 months, overall inflation has risen 2.1 percent, while core inflation is up just 1.8 percent.

After maintaining a benchmark policy rate at a record low near zero for seven years, the Fed started gradually raising rates modestly - once in December 2015 and again in December 2016. Having raised rates three additional times last year, the central bank has forecast the same number of rate increases this year. But some economists think the Fed might be forced to accelerate the pace if signs emerge that inflation is picking up, given that unemployment is hovering at a 17-year low.

For December, energy prices fell 1.2 percent after surging 3.9 percent in November. The December decline was led by a drop in the price of gasoline. The nationwide average for gas is $2.52, up from $2.35 a year ago, according to AAA. The government figures show that gas prices have risen 6.9 percent from December 2016.

Food costs edged up 0.2 percent in December and have increased a modest 1.6 percent over the past year.

Clothing costs are one key sector bucking the trend of higher prices. Clothing costs have fallen the past four months and have declined 1.6 percent over the past year.

© 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.

 
   

 

~:~

Search for AP news  


Advertising with AM1400
is as EASY AS
1-2-3 .
Click Here
for more info.
 
 


     
       
Privacy Statement  |  Terms of Use
© 2007 The New WZAZ Gospel 1400. All Rights Reserved. Site Designed by Rhema Inspired Inc.