* Consumer price index will increase 0.4% in December
* CPI will rise 1.4% year on year
* Core CPI gains 0.1%; increasing 1.6% year-on-year
WASHINGTON, Jan. 13 (Reuters) – U.S. consumer prices rose sharply in December amid a rise in the cost of gasoline, although inflation remained fundamental as the economy battled the COVID outbreak. 19, which has put pressure on the labor market and services. industry.
The Labor Department said on Wednesday that the consumer price index rose 0.4% on last month after gaining 0.2% in November. An 8.4% jump in gasoline prices accounted for more than 60% of the increase in CPI. In the 12 months through December the CPI rose 1.4% after a 1.2% rise in November.
Last month’s CPI readings were in line with expectations of economists. The CPI rose 1.4% in 2020. That was the lowest annual gain since 2015 and was a deception from 2.3% in 2019.
The CPI has increased at an average annual rate of 1.7% over the last 10 years.
Excluding the food and volatile energy components, the CPI rose 0.1% after climbing 0.2% in November. The main CPI known as reductions in the prices of cars and lorries, leisure, air facilities and health care has been halted.
The core CPI gained 1.6% year-on-year, in line with the November rise. It increased 1.6% in 2020 after rising 2.3% in 2019. That was lower than the annual average of 2.0% over the last 10 years.
U.S. stock index futures were flat. The dollar rose against a basket of currencies. U.S. Treasury prices were higher.
The services sector, which makes up more than two-thirds of the U.S. economy, has been hit hard by the virus. The Federal Reserve monitors the basic personal consumption price index (PCE) for its 2% inflation target, a flexible average. The PCE base price index is 1.4%.
FINAL COMMENTS
Economists are divided on the inflation forecast this year. Some believe inflation will break its target, announcing nearly $ 900 billion in additional pandemic relief agreed by the government at the end of December and expectations for further fiscal stimulus from President Joe Biden’s administration incoming and the Democratic-controlled Congress.
Biden is sworn in next Wednesday. Indeed, U.S. Treasury yields have risen in anticipation of stronger economic growth in the second half of the year. A study this month showed a measure of prices paid by manufacturers in December peaked since May 2018, apparently showing bottles in the supply chain caused by the virus.
But other economists expect price pressures to remain unconventional, arguing that manufacturers have limited capacity to pass on the higher production costs to consumers, with at least 19 million Americans on unemployment benefits. Labor market pressures are also seen as hampering wage growth, while white rent rates are likely to dampen rent inflation.
Nevertheless, they all agree that year-on-year inflation will rise in the coming months as the weak coronavirus-related readings in March, April and May come out of the calculation. .
Gasoline prices rebounded 8.4% in December after just two monthly declines. Food prices rose 0.4% after declining 0.1% in November. The cost of food eaten at home increased by 0.4%. Prices for food thrown away from home also rose by 0.4%, with whole-service food gaining 0.3%.
The equivalent rent for the owners of a main residence, that is, what a homeowner would pay for rent or receive from renting a home, increased by 0.1% after being unchanged in the -November. Many tenants have entered into conviction contracts with landlords.
Consumers continued to pay less for health care, with prices falling 0.2% after falling 0.1% in November. Car and lorry prices fell 1.2%, declining for the third straight month. The cost of airline fares fell 2.3%. Hotel and motel accommodation prices were unchanged.
But prices of new motor vehicles rose 0.4%. Clothing prices rose 1.4%. There was also a rise in the prices of home furniture, personal care products and motor vehicle insurance. (Reporting by Lucia Mutikani; Editing by Alison Williams and Andrea Ricci)