"The broad-based nature of the decline in inflation will hardly be encouraging news at the Fed, and if anything it is likely to temper their confidence in the outlook for inflation"
- Millan Mulraine, deputy chief economist at TD Securities
A bunch of worse than expected data was released in the US. Consumer prices unexpectedly declined in December amid drops in food and energy prices. The Labor Department reported the consumer price index declined 0.1%, after being flat in November. Despite the fall last month, costs of living rose 0.7% in the 12 months through December, the biggest gain in a year, following the 0.5% increase in November. The annual inflation rate is climbing as the oil price-caused weak readings in 2015 drop out of calculation. The core CPI, which excludes food and energy costs, rose 0.1%, after climbing 0.2% for three consecutive months. Measured on an annual basis, the core inflation increased 2.1%, the biggest gain since July 2012, compared with a 2.0% rise in November.
A separate report showed US housing starts and permits dropped in December following hefty gains in the preceding month. Groundbreaking declined 2.5% to a seasonally adjusted pace of 1.15 million units. November's data was revised to show 1.8 million unit rate. Nevertheless, December was the ninth month in a row that starts were above 1 million units, the longest run since 2007. At the same time, building permits slipped 3.9% to 1.232 million in December. Housing construction remains subdued by historical standards, although the number of housing units started in 2015 as a whole was 10.8% higher compared to 2014.
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