Washington (Reuters) – American inflation increased at most in eight months in December in the middle of a robust consumption on goods and services, suggesting that the federal reserves are unlikely to rush to continue reducing interest rates soon.
Although a report from the trade department on Friday showed a modest gain prices excluding unstable food and energy components on a monthly basis, the annual increase in the so -called core inflation has not slowed down since October. Disinflation progress stopped in the fourth quarter.
The US Central Bank held prices unchanged on Wednesday for the first time after launching a policy relieving cycle in September. A statement of a decision -watching policy did not include a reference to an inflation that “achieved progress” according to the goal of the Fed of 2%. The prospect of inflation is blurred by the uncertainty about the economic influence of the fiscal, trade and immigration policy of President Donald Trump.
“The forecast of the Fed is intended for a slower pace of monetary mitigation moving forward because the economy works well, and prices are only slowly returning to the goals in the environment of great uncertainty,” said Carl Weinberg, the main economist of high -frequency economy. “These data support this strategy.”
The cost of costs for personal consumption (PCE) costs increased by 0.3% last month, which is the highest increase in last April, after an unregistered 0.1% of winnings in November, said the Office for Economic Analysis of the Ministry of Trade.
The increase was in line with economists. The prices of goods increased by 0.2%, which is the first gain in five months, raised with higher costs for motor vehicles and parts, as well as gasoline and other energy goods, which jumped 4.2%.
Furniture prices and durable household equipment have withdrawn as recreational goods and vehicles. The cost of services increased by 0.3% in the middle of the profits in transport, recreation and accommodation and utility services.
In 12 months to December, the inflation was progressed by 2.6%. This was the biggest gain in seven months and followed by 2.4% in November.
The data is included in the Advance Bruto Domestic Domestic Domestic Report for the fourth quarter published on Thursday. Fed monitors the PCE prices for monetary policy. She reduced her reference interest rate by 100 base points range of 4.25% -4.50% from September.
The central bank has predicted only two decreasing rates this year, which is a decrease of four she has project in September, due to caution due to the plans of the new Trump administration for reduction of taxes, wide tariffs on imports and immigration action, which economists consider an inflator.
It is not expected to reduce the rate before June. Highlighting the unstable components of food and energy, the PCE price index increased 0.2% last month after a 0.1% increase in an increase in a 0.1% increase in November. In 12 months to December, the basic inflation progressed 2.8%, growing up for the same margin for three months.
Some economists have highlighted a mild monthly gain in the basic inflation and a separate report by the Office for Statistics of the Ministry of Labor, which shows a marginal increase in working costs in the fourth quarter as a signs that the disinflation trend remained intact. The fundamental inflation increased at 2.2% annual rate in three months to December.
“It will be a welcome news on the Fed, although, as it has been transferred to the recent Fed, the Committee will be patient in considering further reduction in interest rates, and we still see them on hold by the middle of the year,” said Abiel Reinhart, economist, economist in JPMORGAN.
Fed Jerome Powell’s chairman has indicated this week that politics creators are watching a 12-month inflation “because it draws the seasonality issues that can exist.”
Wall Street stocks were bigger. The dollar progressed against the currency basket. The American Treasury gives a rose.
Work costs are rising
The employment cost index (ECI), the widest operating measure, received 0.9% in the fourth quarter after increasing 0.8% in the third quarter. The costs of the work have climbed to 3.8% in 12 months to December, which is the slowest from the third quarter of 2021, after increasing 3.9% in the year to September.
ECI observes policy creators as one of the better measures of weakness in the labor market and the predictor of the core inflation because it adapts to the composition and changes in the quality of work.
“ECI is still in accordance with the stability of prices as long as the productivity of labor continues to grow about 2% compared to one year,” said Sal Guarani, a senior economist on BMO Capital Markets.
“However, deportations could add some pressure.”
Tariff fears sent consumers rushing to supplies of goods to avoid higher prices, helping consumer consumer consumer, which in the fourth quarter has achieved the fastest growth pace in almost two years, maintaining economic expansion.
Consumer consumption, which accounts for more than two -thirds of American economic activity, jumped 0.7% in December after an increase in 0.6% rise increased in November. It was previously stated that the consumption received 0.4% in November.
The data of the goods increased by 0.9%, guided by cars, food, as well as gasoline and other energy products. Consumption on services has increased by 0.6% due to major gains in accommodation and utility services, transportation, healthcare and other services.
Economists expect the prevailing shopping to continue in January.
When adapted to inflation, consumer consumption increased by 0.4%, placing an economy on a higher growth path that went into the first quarter.
Personal income increased 0.4% after receiving 0.3% in November. With the consumption of surpassed revenues, the savings rate fell to a two -year -old series of 3.8% compared to 4.1% in November.
Some economists claimed that low savings rates are not suitable for further gains in consumer consumer consumer after a tariff is purchased. Others were not worried.
“We expect that consumer consumption will continue to be reinforced with strong balances, including record amounts of housing,” said Nancy Vanden Houten, a leader American economist from Oxford Economics.
(Reporting Lucia Mutikani; Mounting Chizu Nomiyama and Paul Simao)
