Investing.com – Consumer price inflation (CPI), on an annualized basis, rose as expected in December, although the core data unexpectedly strengthened, reinforcing the Federal Reserve’s plans to move ahead with gradual rate hikes, official data showed on Friday.
In a report, the U.S. Commerce Department said that consumer prices rose 0.1% in December from a month earlier, below forecasts for a 0.2% increase and a 0.4% gain in the previous month.
Year-over-year, consumer prices increased 2.1% last month, matching expectations and easing from the 2.2% advance seen in November.
Consumer prices, excluding food and energy costs, increased by a seasonally adjusted 0.3% last month, above expectations for a 0.2% advance and compared to November’s 0.1% rise.
Furthermore, core CPI also increased to an annualized rate of 1.8% in December, beating expectations that it would repeat the prior month’s reading of a 1.7% rise.
Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. The central bank usually tries to aim for 2% core inflation or less.
According to Investing.com’s Fed Rate Monitor Tool, Fed fund futures expect the U.S. central bank to hold rates steady for its January 31 decision, but raise them again in March as part of its plans to gradually remove accommodative policy.
After the report, which was released simultaneous with retail sales for the same month, EUR/USD was trading at 1.2139 from around 1.2135 ahead of the release of the data, GBP/USD was at 1.3637, compared to 1.3635 previously, while USD/JPY was at 111.40 from 111.15 earlier.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 91.12, compared to 91.09 ahead of the report.
Meanwhile, U.S. stock futures pointed to a mixed open. The Dow futures rose 64 points, or 0.25%, the S&P 500 futures were unchanged, while the Nasdaq 100 futures slipped 5 points, or 0.07%.
Elsewhere, in the commodities market, gold futures traded at $1,327.90 a troy ounce, compared to $1,332.30 ahead of the data, while crude oil traded at $63.27, compared to $63.19 prior to the release.