FXStreet (Córdoba) – Analysts from Wells Fargo, explained that today’s report that showed a negative 0.1% reading in the December CPI index in the US, was because the decline in food and energy prices offset gains in core inflation.
Key Quotes:
“The CPI fell 0.1 percent in December as a decline in food and energy more than offset further gains in core inflation. Although energy will continue to weigh on the index in the near term, the drag is diminishing”
“The trend in both headline and core CPI has picked up. The year-over-year change in the CPI rose to 0.7 percent, while the core index increased to 2.1 percent.
“Firmer readings in the core CPI should continue to support the Fed’s confidence that inflation will eventually rebound towards target. Although the Fed’s preferred measure of core inflation, the PCE deflator, has been stuck around 1.3 percent over the past year, the uptrend in core CPI suggests underlying inflation is not as unequivocally weak.”
“We expect base effects will push the year-over-year rate of headline inflation up more noticeably in the coming months, but for headline CPI to remain below 2 percent through the remainder of the year. Core inflation, however, should continue to move along around a 2 percent pace amid a tightening housing market and rebound in medical care prices.”
(Market News Provided by FXstreet)