December Consumer Prices

The December Consumer Price Index rose 0.1% at the headline level, pretty much as expected.  Housing remained unchanged for the month and recreation tumbled a bit; combined, these two factors account for the relatively steady reading.  Helping to keep it positive were slight rises in both food and energy.  The year-over-year rate of consumer inflation at the headline level surged to 2.8% from the 1.9% reading we saw in the prior month.  The core CPI, which subtracts food and energy prices, also rose 0.1% in December, bringing its gain Y/Y to 1.8%, also a 0.1% increase from November’s annualized figure.  There seems to be little we currently can anticipate that might drive this measure of inflation higher besides exogenous influences like bad weather on crop prices or a global dust-up which roils the energy markets.  Therefore, despite the slight uptick seen in December, we will leave our needle as is, at least until the Labor Department provides us with their January update next month.