Spike in gasoline index underpins rise in U.S. consumer prices

Xinhua
14 Jan 2021, 06:16 GMT+10

U.S. consumer prices rose in December, largely driven by the spike in gas prices.
The consumer price index (CPI) increased 0.4 percent in December after rising 0.2 percent in November.
The seasonally adjusted increase in the all items index was driven by an 8.4-percent increase in the gasoline index.

WASHINGTON, Jan. 13 (Xinhua) -- U.S. consumer prices rose in December, largely driven by the spike in gas prices, but the overall inflation is expected to remain subdued due to the pandemic, the Labor Department reported Wednesday.

The consumer price index (CPI) increased 0.4 percent in December after rising 0.2 percent in November, according to the department's Bureau of Labor Statistics.

The seasonally adjusted increase in the all items index was driven by an 8.4-percent increase in the gasoline index, which accounted for more than 60 percent of the overall increase, the report noted.

Excluding the volatile food and energy categories, the so-called core CPI edged up 0.1 percent in December, the report showed.

Over the last 12 months, the all items index increased 1.4 percent before seasonal adjustment. Excluding food and energy, the index rose 1.6 percent during the same period.

U.S. Federal Reserve Chairman Jerome Powell announced in August that the central bank would seek to achieve inflation that averages 2 percent over time, a policy strategy that would allow moderate inflation overshoot before beginning to raise the near-zero interest rates.

"A rapid slowdown in inflation during the height of global lockdowns last spring set the stage for a temporary bump in inflation in early 2021," Diane Swonk, chief economist at Grant Thornton, a major accounting firm, wrote in a recent blog.

She forecast that inflation would pick up modestly and move above the Federal Reserve's 2-percent target in late 2023.