US core consumer-price gauge cooled slightly from previous month

[WASHINGTON] A key measure of prices paid by US consumers cooled in December from a month earlier as slack in the labour market and muted demand helped keep inflation pressures tame.

The core consumer price index, which excludes volatile food and energy costs, increased 0.1 per cent from the prior month after a 0.2 per cent gain in November, a Labor Department report showed Wednesday. Compared with a year earlier, the core CPI rose 1.6 per cent.

Buoyed by higher gasoline prices, the broader CPI advanced 0.4 per cent from a month earlier and 1.4 per cent from December 2019. Both the core and overall CPI month-over-month increases matched the median estimates in a Bloomberg survey of economists.

The report shows inflation remains well below the Federal Reserve's goal and reflects an economy still grappling for momentum amid a resurgent pandemic. At the same time, demand is gradually picking up for some industries, while widespread vaccinations and additional fiscal stimulus have the potential of generating some pricing power in the coming months.

Most economists - and the Fed - expect inflation to remain relatively tame this year, though inflation expectations among market participants have steadily crept higher.

BLOOMBERG