Inflation rose more than expected in December in the United States, causing concern among investors who are eager to see if the Federal Reserve will start reducing interest rates in 2024. The Consumer Price Index (CPI) for December showed a 0.3% increase compared to November and a significant 3.4% increase compared to the same month of the previous year, higher than the 3.1% observed in November.
Economists had forecasted a 0.2% month-over-month rise in inflation and a year-on-year increase of 3.2%, according to Bloomberg data. Excluding the most volatile product categories of food and energy, core inflation registered an interannual rate of 3.9%, a slight decrease from 4.0% in November.
The rise in housing prices played a significant role in the overall inflation increase, with the housing index rising 6.2% year-on-year, contributing to over half of the CPI increase in December. Rental prices also remained high, with the rental index and rental equivalent index for landlords increasing 0.5% month-over-month for the third consecutive month.
Other products that experienced significant increases in December were vehicle insurance, which saw a 20.3% increase compared to the previous year, and food, which rose 2.7% compared to the previous year. Egg prices stood out with a strong 8.9% month-over-month increase.
Overall, the higher-than-expected inflation numbers for December have raised concerns among investors and economists as they monitor how the Federal Reserve will respond and whether interest rates will be adjusted in 2024.