A highly anticipated report released by the Labor Department on Wednesday showed the annual rate of U.S. consumer price growth once again reached the highest level in almost 40 years in December.
The report showed the annual rate of consumer price growth accelerated to 7.0 percent in December from 6.8 percent in November, showing the biggest yearly jump since June of 1982.
Core consumer prices, which exclude food and energy prices, were up by 5.5 percent year-over-year in December compared to the 4.9 percent spike in November. The annual growth reflected the biggest surge since February of 1991.
The continued acceleration in the annual rate of consumer price growth came as prices increased by slightly more than expected on a monthly basis.
The Labor Department said its consumer price index rose by 0.5 percent in December following a 0.8 percent advance in November. Economists had expected consumer prices to rise by 0.4 percent.
Core consumer prices increased by 0.6 percent in December after climbing by 0.5 percent in November. Core prices were expected to advance by 0.5 percent.
The monthly consumer price growth primarily reflected higher prices for shelter and used cars and trucks along with an increase in food prices.
On the other hand, the report said energy prices fell by 0.4 percent in December amid decreases in prices for gasoline and natural gas.
“The Fed now sees it as its top priority to ensure that inflation moderates back towards the long-run 2% inflation target in order to promote a long-lasting economic expansion that brings about maximum employment over time,” said Kathy Bostjancic, Chief U.S. Financial Economist at Oxford Economics.
“We now see the Fed raising rates in March and on course for four rate hikes in total in 2022,” she added. “Based on the hawkish comments from Fed officials, balance sheet reduction (quantitative tightening) will likely start mid-year.”
On Thursday, the Labor Department is scheduled to release a separate report on producer prices in the month of December. Producer prices are expected to rise by 0.4 percent, while core producer prices are expected to climb by 0.5 percent.
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