Published: Sat, January 13, 2018
Markets | By Josh Butler

U.S. inflation accelerates in December

U.S. inflation accelerates in December

"CPI is lower than what I was expecting". Excluding sales of automobiles, it remained a 0.4% rise, matching expectations and following 1.3% in November, which was revised up from 1%. That effect should wash out of the 12-month change in prices later this year. The energy index, which rose sharply in November, declined in December as the gasoline index decreased.

Its Producer Price Index gave up 0.1% in December from November.

The Fed's 2% annual inflation target is based on their preferred price measure, the Commerce Department's personal-consumption expenditures price index.

Considering all urban consumer group represents about 89 % of the total USA population they are a good proxy for United States consumer prices.

But analysts drilling into details of the data note that inflation was accelerating in the final quarter of the year, which means the Fed may be right that the lack of price pressures earlier in 2017 was due to one-off factors.

The Consumer Price Index inflation for rural areas was 5.27% in December 2017, while that for urban areas was 5.09% as compared to that in December 2016. This was a slight miss from the 0.5% expected print. The cost of motor vehicle insurance increased 0.6 percent. The report will be published at 10.00 am ET. For all of 2017, retail sales were 4.2% higher than 2016, the biggest annual hike in three years.

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"That's encouraging in its own right as it says the Fed really isn't that far off from hitting its targets", he added.

India's retail inflation in November breached the Reserve Bank of India's.

The US central bank is forecasting three rate hikes for 2018. Although, Kaplan did warn that the flattening yield curve was a sign of a sluggish growth outlook for the USA economy.

Earlier this month, Finance Minister Arun Jaitley had told Parliament that inflation had increased owing to a seasonal rise in vegetable prices and the higher house rent allowances disbursed to government employees under the 7th Pay Commission recommendations. Ultimately, Bullard stated that he was against hiking rates at the expense of inverting the yield curve.

At 12:47 p.m. ET (1747 GMT), the Dow Jones Industrial Average .DJI was up 166.54 points, or 0.65 percent, at 25,741.27 and the S&P 500 .SPX was up 13.93 points, or 0.50 percent, at 2,781.49.

A Commerce Department report yesterday showed U.S. retail sales rose in December and November's gain was revised up, indicating a robust holiday-shopping season. Stocks on Wall street were trading higher.

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