Inflation slightly increased in December

The Bureau of Labor Statistics Thursday released its monthly consumer price index report for December. America’s Credit Unions’ Senior Economist Dawit Kebede provided an analysis of the 0.3 percent increase consumers saw last month after slowing down in the prior two months, resulting in a 3.4 percent rate over the last 12-months. 

"Core inflation, a reliable predictor of future headline inflation, remained unchanged in December and slightly declined compared to a year ago,” said Kebede. “This, coupled with reduction in underlying price pressures, indicates that we may be approaching the Federal Reserve's inflation target this year, despite a slight increase in headline inflation. A soft landing for the economy is increasingly likely, as unemployment stays low and prices head in the right direction."  

Increases in housing price, food and energy, vehicles, and transportation services contributed to the monthly increase, with housing accounting for half of the overall monthly rise. 

Core inflation, which excludes volatile food and energy items and serves as a good predictor of future overall prices, remained unchanged in December. It also experienced a slight decline over the last 12 months, indicating that prices are moving in the right direction as underlying price pressures continue to decline. Inflation is expected to reach the Federal Reserve's target of 2 percent by year-end as the labor market continues to show a better balance between demand and supply, and consumer spending is anticipated to slow down. 

America’s Credit Unions will continue to provide economic forecasts and research through the daily newsletter and at americascreditunions.org

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