U.S. consumer prices in December rose more than expected as rents continued to edge higher, which sparked market’s speculation that the Fed’s rate cut in March could be delayed further.
The consumer price index (CPI) rose 3.4% in the 12 months through December after an increase by 3.1% a month prior, according to the report from the Labor Department’s Bureau of Labor Statistics said on Thursday. This was higher than a consensus of a 3.2% rise forecast by economists in the Reuters poll.
Meanwhile, CPI rose 0.3% when compared to November after a 0.1% increase in that month. The cost of shelter accounted for more than half of the increase in prices.
Despite a rise in headline inflation, core CPI, which excludes volatile food and energy prices, fell to 3.9%, which was the first time that prices drop below 4% since
September 2021.
Since dropping to its low of this cycle at 3% last June, the U.S. CPI had never reached that level again.
Following the hotter-than-expected CPI data, Dow Jones Industrial Average fell 163.88 points or 0.43% to 37,531.85 points. S&P 500 dropped 0.42% to 4,763.37 points and Nasdaq Composite dipped 0.42% to 14,907.41 points.
