Household inflation pressures were little changed last month, according to new data from the Bureau of Labor Statistics (BLS). Specifically, the consumer price index (CPI) for all urban consumers declined by 0.1 percent in December, the first monthly decrease since March but due mainly to the largest drop in energy costs in almost three years. “Core” CPI, which excludes the volatile food and energy components, rose by 0.2 percent in December and 2.2 percent over the past twelve months.
Both of those figures are unchanged from the November data and suggest that household price pressures have somewhat stabilized following the faster run-up earlier in 2018. Rising healthcare and shelter costs were among the main contributors to December’s core CPI gain, although the annual rates of growth for these components are well off the cycle highs. Core goods prices have also started to pick up recently, perhaps a side-effect of the ongoing trade tensions. Altogether, though, the latest CPI report by itself will likely not have a significant impact on the Federal Reserve’s plans for monetary policy in 2019, and if anything support the argument for data-driven patience. As for consumers, the recent pullback in headline price pressures and acceleration in average hourly earnings have together provided the fastest inflation-adjusted wage growth in more than two years.
Sources: Econoday, U.S. DoL, Bloomberg, FRBSL
Post author: Charles Couch