U.S. consumer prices increased more than expected in December, potentially delaying an anticipated interest rate cut in March from the Federal Reserve. The Labor Department’s consumer price index (CPI) increased 0.3% last month, following a 0.1% rise in November. On an annual basis, the CPI rose 3.4%. Economists surveyed by Dow Jones had been looking for a year-over-year reading of 3.2%. Excluding volatile food and energy prices, the so-called core CPI also rose 0.3% for the month and 3.9% from a year ago, compared with respective estimates of 0.3% and 3.8%. The cost of shelter accounted for the more than half of the increase in the CPI, with food prices increasing 0.2%, and energy gaining 0.4%. Wages adjusted for inflation posted a 0.2% gain on the month. “These are not bad numbers, but they do show that disinflation progress is still slow and unlikely to be a straight line down to 2%”, said Seema Shah, chief global strategist at Principal Asset Management. “Certainly, as long as shelter inflation remains stubbornly elevated, the Fed will keep pushing back at the idea of imminent rate cuts”.
