Morningstar

December CPI Inflation Comes in as Forecast at a 2.7% Annual Rate

Core CPI at a 2.6% annual rate.

Collage illustration of a pie chart with images of the Federal Reserve, an upward arrow, and banknotes.

The Bureau of Labor Statistics reported that the Consumer Price Index increased 2.7% in December from year-ago levels after rising by the same 2.7% rate in November. Year-over-year core CPI (which excludes volatile food and energy costs) rose 2.6%, matching the November rate of 2.6%.

Overall inflation rose 0.3% month over month after rising 0.2% from September through November. Core inflation rose 0.2% after increasing 0.2% from September through November.

Economists had expected CPI to rise 0.3% on a monthly basis and 2.6% year over year in December, according to the consensus estimates from FactSet. Core CPI was expected to come in up 0.3% on a monthly basis and up 2.7% year over year.

December CPI Inflation Report Highlights

  • CPI rose 0.3% for the month after rising 0.2% from September through November.
  • Core CPI rose 0.2% after rising 0.2% from September through November.
  • CPI increased 2.7% year over year after the same 2.7% rate the prior month.
  • Core CPI rose 2.6% from year-ago levels after the same 2.6% rate the prior month.

Food prices increased 0.7% in December. Grocery and restaurant prices each increased 0.7%. Overall energy prices increased 0.3%, while utility gas prices rose 4.4%, fuel oil prices decreased 1.5%, gasoline prices fell 0.5%, and electricity prices decreased 0.1%. Shelter prices rose 0.4% in December.

What Is the CPI?

The Consumer Price Index is a mainstream measure of inflation that tracks changes in consumer prices for a wide variety of goods and services, including food, housing, healthcare, and energy.

The CPI report is widely followed by investors, but it isn’t the only way to keep track of inflation. When it comes to the Federal Reserve’s decisions on interest rates, the focus is generally on the Personal Consumption Expenditures Price Index. The Fed targets a 2% inflation rate, but that is based on the PCE inflation index, not the CPI. However, the CPI generally makes front-page news because it is released earlier than the PCE and contains much of the same information. Both reports are released on a monthly cadence.

This article was generated with the help of automation and reviewed by Morningstar editors. Learn more about Morningstar’s use of automation.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

Sponsor Center