January 16, 2020

CPI sees growth; No rate changes expected

CPI Flash ReportOn a seasonally adjusted basis, overall consumer prices increased 0.2 percent in December following a 0.3 percent rise in November. NAFCU's Curt Long, in a new Macro Data Flash report, attributed the growth mainly to increased energy, medical care, and shelter prices.

"Energy is up 3.5 percent to its year-ago level, and has continued a rise for two consecutive months," said Long, NAFCU's chief economist and vice president of research. "Used car prices fell 0.8 percent in December, but this could be partly due to a new methodology for calculating the index.

“The Federal Reserve’s preferred measure of inflation grew by just 1.6 percent for the 12 months through November, well below the FOMC’s 2-percent target. That accounts for the broad agreement to hold off on rate hikes until clear signs emerge of above-target inflation," he concluded.

The FOMC is set to hold its first meeting of 2020 Jan. 28-29. The committee cut rates three times last year before holding the target rate range at 1.5 percent to 1.75 percent at the conclusion of its December meeting.

The Bureau of Labor Statistics reported that the overall consumer price index (CPI) grew 2.3 percent over the 12-month period. Core prices (excluding food and energy costs) increased 0.1 percent in December compared to the previous month. Year-over-year core CPI growth was 2.2 percent.

Energy prices also rose in December, increasing 1.4 percent. Food growth was up 1.8 percent on a year-over-year basis after rising 0.2 percent in December.