US | Core prices were boosted by shelter prices in Dec…

Summary

December's inflation increased to 3.4%, driven by a monthly variation of 0.3%. At 3.9%, core inflation rose by 0.3% month-on-month, influenced by used cars and shelter; the latter remains a key factor for the expected decline in inflation in the coming months.

Key points

• Key points:
• Dec inflation rose to 3.4%, surpassing expectations (3.2%) and up from 3.1% in Nov, with a higher-than-expected 0.3% MoM increase.
• Core inflation rose by 0.3% MoM, driven by 0.5% MoM rises in used car and shelter prices.
• Shelter continues to be the main driver of core inflation but has eased from the 8.3% peak in 2Q23 to 6.2% in Dec and is set to ease substantially in the coming months.
• Non-core components saw significant declines in gasoline and gas (monthly variations of -5.5% and -0.4%). Food is still driving up non-core inflation.
• Recent inflation increases, though moderate, somewhat reduce the likelihood of a March rate cut by the Fed.

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