Core inflation in the US accelerated less than expected in December

The core consumer price index (CPI), which excludes volatile products, rose 0.1% on a monthly basis in December.

This is the lowest growth rate for the indicator in the last three months, according to a report by the Ministry of Labor published on Tuesday. Compared to that, analysts expected core inflation to accelerate by 0.2%. On an annual basis, the same indicator grew by 2.3% in 2019, consistent with projections.

The data suggests that Fed management will maintain the established interest rate line for the most part, and possibly throughout the year. Fed officials cut the institution’s benchmark interest rates three times in 2019 and signaled that they would pause this policy in the near future, or at least until the economic outlook shows a significant change.

Although inflation acceleration remains low on a monthly basis, the annual increase of 2.3% marks the fastest rate of increase since 2007. At that time, core inflation accelerated by 2.4% YoY.

The Ministry of Labor’s report showed that housing spending, which accounts for about one-third of the general consumer price index, is slowing. They rose 0.2% after reporting a 0.3% increase in November. For example, rents for the main home have increased by 0.2% on a monthly basis.

The prices of cars and trucks reported a monthly decline of 0.8% and a decrease of 0.7% on an annual basis.

On the other hand, energy prices increased by 1.4% on a monthly basis. Food expenditures increased by 0.2% and medical expenses by 0.6%.

A separate report by the Ministry of Labor on Tuesday showed that average hourly earnings adjusted to price changes rose 0.6% year-on-year in December.