US inflation hits 3.4% in December, exceeding analyst expectations

Consumer prices in the US climbed again in December, caused by higher costs for housing, dining out, and car insurance.
Consumer prices in the US climbed again in December, caused by higher costs for housing, dining out, and car insurance.

Consumer prices in the US climbed again in December, caused by higher costs for housing, dining out, and car insurance.

The US Labor Department has reported that inflation in the country rose to 3.4% over the year in December 2023, surpassing the 3.1% recorded in November. 

This acceleration has prompted caution from the US Federal Reserve, which has a target inflation rate of 2%.

Cautionary Stance by the Federal Reserve

Despite earlier efforts to cool inflation by raising interest rates, the Federal Reserve remains cautious, with the latest figures indicating a slower-than-expected progress in disinflation.

Economic Impact and Market Expectations

Analysts anticipate ongoing improvements in inflation rates, with expectations of a continued deceleration. 

The report highlights challenges in specific sectors, such as a 20% increase in car insurance prices and a 6.5% rise in rents. While goods prices have moderated, disparities persist, influencing market expectations.

Car Insurance, Rents, and Grocery Prices

The report details a 20% surge in car insurance prices compared to December 2022, alongside a 6.5% increase in rents. 

Grocery prices experienced a more modest gain of 1.3%, contrasting with a 5.2% rise in prices for dining out.

Fed’s Interest Rate Cut Speculations

While there are hopes for a swift interest rate cut by the Federal Reserve, the report’s findings suggest a cautious approach. 

Brian Coulton, Chief Economist at Fitch Ratings, emphasizes that the Fed may not move as quickly as market expectations indicate.

Public Sentiment and Economic Outlook

Despite improvements, the overall economic sentiment among the American public remains subdued. 

The report reflects a complex economic landscape, with progress in some areas and challenges in others, influencing the broader outlook for the US economy.

Gary Monroe

Gary Monroe is a seasoned contributor to the Los Angeles Business Magazine, where he offers insightful analysis on local business trends and economic developments. With a focus on Los Angeles' dynamic commercial landscape, Gary's articles provide valuable perspectives for entrepreneurs and business professionals in the city.

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