HomeFinance NewsEconomyInflation Heats Up: 3.4% Annual Surge Stuns Economists

Inflation Heats Up: 3.4% Annual Surge Stuns Economists


Consumer prices rose 0.3% in December, higher than expected, pushing the annual rate to 3.4%


Consumer prices in the United States increased more than expected in December, with a 0.3% rise from November and a 3.4% increase compared to the same month the previous year.

This was higher than the estimated 0.2% monthly increase and 3.2% yearly increase.

The core CPI, which excludes volatile food and energy prices, also rose 0.3% for the month and 3.9% from a year ago, slightly above the estimated 0.3% and 3.8% increases.

The main contributor to the increase was rising shelter costs, which accounted for more than half of the core CPI increase.

Food prices also saw a modest increase, while energy prices rose after a decline in November.

Despite the higher-than-expected inflation readings, futures traders anticipate the Federal Reserve may still start cutting interest rates in March.

However, the probability reflects a difference in views between the market and the Fed about the timing and extent of rate cuts in 2024.

Federal Reserve officials are paying close attention to whether inflation shows signs of returning to the central bank’s 2% target, particularly in service prices.

Recent comments from some policymakers indicate that they are hesitant to commit to an easier monetary policy until inflation is under control.

In related economic news, initial jobless claims remained steady at 202,000, below market expectations.

  • Overall sentiment: neutral
  • Positive

    “The year-over-year core reading was the lowest since May 2021.”

    “Fed officials are paying particular attention to services prices as evidence for whether inflation is showing durable signs of getting back to the central bank’s 2% target.”


    “Prices that consumers pay for a variety of goods and services rose more than expected in December, according to a Labor Department measure Thursday that shows inflation still holding a grip on the U.S. economy.”

    “Fed officials largely expect shelter costs to decline through the year as renewed leases reflect lower rents.”

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