"The overall narrative is, inflation is accelerating. We're seeing broad-based, modest increases in prices. The Fed is going to be pleased with these numbers".
-Tom Simons, Jefferies LLC
More expensive gasoline and rental accommodation boosted US consumer inflation last month, official figures showed on Wednesday. The Department of Labour reported its Consumer Price Index advanced 0.3% month-over-month in December, following the previous month's 0.2% gain. On a yearly basis, the headline CPI climbed 2.1%, the largest annual increase since June 2014, after rising 1.7% in November. Both readings came in line with analysts' expectations. Meanwhile, core consumer prices remained unchanged in December from the prior month, climbing 0.2%. Year-over-year, the core CPI grew 2.2%, compared to November's 2.1% rise. However, the Fed's preferred inflation measure, the core PCE, remained below the Central bank's 2% target at 1.6% in December. Last month's acceleration of headline inflation was mainly driven by higher prices of gasoline and rental accommodation that jumped 3.0% and 0.3%, respectively. Separately, the Federal Reserve said industrial production rose 0.8% last month, compared to November's downwardly revised fall of 0.7%. The figure came in line with economists' projections. The Utilities Index contributed most to the December increase, posting a 6.6% monthly rise. The Capacity Utilization Rate climbed 0.6% to 75.5% from November's downwardly revised 74.9%.
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