US core inflation turns down again
US consumer prices rose sharply in December, by 0.4% from the previous month.
Commerzbank Economic Research
01/15/2025
The data...
US consumer prices increased by 0.4% in December from the previous month. The year-on-year rate rose from 2.7% to 2.9%. The more important core rate, which excludes the volatile prices of energy and food, was 0.2% month-on-month. This was less than the consensus forecast (0.3%), but in line with our forecast. The year-on-year rate fell from 3.3% to 3.2%.
... and the background
At first glance, the report on US consumer prices in December was disappointing. After all, the monthly increase of 0.4% is the strongest since February 2024. However, this was mainly due to higher prices for gasoline (+4.4%) and gas (+2.4%). But as an indicator of the trend, the core rate excluding energy and food is more important, also in the opinion of the Federal Reserve. This was much more moderate at 0.2% and was the lowest since July.
Thus, the medium-term picture looks better than it did last month, when the core rate was 0.3% for the fourth time in a row. We had already pointed out at the time that the decline in the core rate was not linear in the past, but that there were several phases in which the decline stalled. However, these phases were only temporary and the year-on-year rate resumed its downtrend. Today's data point in this direction, even if inflationary pressure is still too high.
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