Rising shelter, healthcare costs boost US consumer inflation in December

U.S. consumer prices increased more than expected in December as Americans paid more for shelter and healthcare, suggesting that it was probably too early for the Federal Reserve to start cutting interest rates.

Expectations for a rate cut in March were also tempered by other data on Thursday showing the labor market remaining tight at the turn of the year, with the number of people filing new claims for unemployment benefits unexpectedly falling last week. The reports followed news last Friday that the economy added 216,000 jobs in November and annual wage growth picking up.

“Overall, today’s inflation data makes a March rate cut seem like a less likely scenario,” said Charlie Ripley, senior investment strategist at Allianz Investment Management in Minneapolis.

The consumer price index (CPI) rose 0.3% last month after nudging up 0.1% in November, the Labor Department’s Bureau of Labor Statistics said. The cost of shelter, which includes rents, hotel and motel stays as well as school housing, accounted for more than half of the increase in the CPI.


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