U.S. Consumer Prices Inch Up 0.1% In December, Less Than Expected
(RTTNews) - Reflecting a sharp pullback in energy prices, the Labor Department released a report on Friday showing U.S. consumer prices rose by less than expected in the month of December.
The Labor Department said its consumer price index inched up by 0.1 percent in December after climbing by 0.4 in November. Economists had expected prices to rise by 0.2 percent.
The uptick by the consumer price index was primarily due to an increase in shelter costs, which rose by 0.4 percent in December after edging up by 0.2 percent in November.
The report said food prices also rose by 0.2 percent in December after coming in unchanged for two consecutive months.
On the other hand, the report showed a steep drop in energy prices, which slumped by 1.2 percent in December after spiking by 3.9 percent in November.
The pullback in energy prices came as gasoline prices tumbled by 2.7 percent in December following a 7.3 percent jump in the previous month.
Meanwhile, the report said core consumer prices, which exclude food and energy prices, increased by 0.3 percent in December after ticking up by 0.1 percent in November. Core prices had been expected to rise by 0.2 percent.
Along with the shelter index, the indexes for medical care, used cars and trucks, new vehicles, and motor vehicle insurance also increased in December.
The Labor Department said the annual rate of consumer price growth slowed to 2.1 percent in December from 2.2 percent November, although the annual rate of core price growth accelerated to 1.8 percent from 1.7 percent.
Paul Ashworth, Chief U.S. Economist at Capital Economics, predicted base effects will keep core inflation low in the first few months of 2018.
"Once spring comes around, however, the big declines in components like wireless telephone services prices will drop out of the annual calculation and the core inflation rate will rebound well above 2%," he added.
On Thursday, the Labor Department released a separate report unexpectedly showing a modest decrease in producer prices in the month of December.
The producer price index for final demand edged down by 0.1 percent in December after climbing by 0.4 percent in November. Economists had expected prices to rise by 0.2 percent.
Excluding food and energy prices, core producer prices still dipped by 0.1 percent in December following a 0.3 percent increase in November. Core prices had also been expected to tick up by 0.2 percent.