from Rebel Capitalist
Inflation Report Shows Upsurge Days Before Trump Takes Office
Prices rose 2.9% in December compared to a year ago.
by Max Zahn
ABC News
Consumer prices rose 2.9% in December compared to a year ago, ticking up from the previous month and extending a resurgent bout of inflation just days before President-elect Donald Trump takes office. The reading matched economists’ expectations.
The fresh data arrives after a jobs report last week showed stronger-than-expected hiring in December, which sent the stock market plummeting and bond yields soaring on fears that the Federal Reserve may delay long-forecasted interest rate cuts.
The Fed may find additional reason to delay those interest rate cuts in Wednesday’s report, since stubborn price hikes may raise concern that inflation would move even higher if interest rates were to be lowered.
Beneath the Skin of CPI Inflation: YoY CPI +2.9%, Worst Since July, MoM CPI +0.39% (+4.8% Annualized), Worst Since February. Core CPI Stuck for 7th Month at 3.1%-3.3%
by Wolf Richter
Wolf Street
Categories that helped power the cooling of CPI are U-Turning – used & new vehicles, food, energy – just as housing seems to be coming in line.
The overall Consumer Price Index rose by 0.39% (+4.8% annualized) in December from November, the sharpest increase since February 2024. It has been accelerating since the low point in June (blue).
The three-month CPI, which irons out some of the month-to-month squiggles. jumped by 3.9% annualized, the sharpest increase since April, and the fifth month-to-month acceleration in a row.
The year-over-year CPI rose by 2.89%, the sharpest increase since July, and the third month in a row of acceleration.
Inflation Ticked Up to 2.9% in December as Expected – Highest Since July
Inflation in December was its highest since the summer, according to data released Wednesday morning, a sign of the lingering presence of higher prices for consumers, though economists did predict an inflation bump was due.
by Derek Saul
Forbes
Key Facts
– Headline inflation was 2.9% in December, according to year-over-year changes in the Bureau of Labor Statistics’ consumer price index, the most commonly cited measure of inflation, while the index rose 0.4% from November to December on a seasonally adjusted basis.
– Consensus economist forecasts called for 2.9% annual inflation and 0.3% month-over-month inflation, according to Dow Jones data.
– That’s the highest annual inflation reading since July’s 2.9%.
– Core inflation, which excludes the more erratic food and energy categories, was 3.2% last month, actually better than estimates of 3.3%, where it stood from September to November, though it’s still well above the 2% long-term target held by the Federal Reserve.
Wall Street Surges as Inflation Data, Bank Earnings Fuel Rally
by Chuck Mikolajczak
Reuters.com
NEW YORK, Jan 15 (Reuters) – U.S. stocks surged on Wednesday, with all three major indexes registering their biggest daily percentage gains in more than two months, as lower-than-expected December core inflation data and solid earnings from major U.S. banks fueled a rally.
The Labor Department said the consumer price index (CPI) increased the most in nine months as energy costs rose, although a measure of underlying inflation pressures subsided.
Data on Tuesday showed the producer price index (PPI) rose less than expected.
“We’ve gotten so puckered over the fact that rates might be going up and this is going to be a problem and the UK won’t be able to borrow money and oh, our deficit, and so everyone was kind of wound up,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.
Trump’s Inauguration Won’t Change the Fact That People Dislike High Gas Prices
The incoming administration is grappling with uncomfortable political consequences of the tariffs Trump wants to impose.
by Eric Boehm
Reason.com
After a meeting with President-elect Donald Trump at Mar-a-Lago, Alberta Premier Danielle Smith told reporters that she does not expect Canadian goods to gain any special exemptions from the tariffs Trump plans to levy soon after taking office.
Smith had pitched Trump on exempting Alberta’s crude oil exports from the 25 percent across-the-board tariffs that the incoming president has threatened to impose, the Edmonton Journal reported. Alas, Trump seems unmoved. “I haven’t seen any indication in any of the president’s public commentary or even in the comments that he had with me that he’s inclined to change his approach,” Smith told the paper.
On the American side of the border, it might be helpful for someone to game this out. More than 50 percent of the crude oil imported to the U.S.—the stuff that is used to make gasoline and other essential products—comes from Canada (and much of that total comes from Alberta, specifically).
Record High Prices in Coffee, Cocoa & Cattle as Oil Spikes and Travel Boom Continues
from King World News
We have recently seen record high prices in coffee, cocoa and cattle as the price of oil also spikes and the travel boom continues. Take a look…
Massive Spike In Oil Prices
January 14 (King World News) – Peter Boockvar: Many of the world’s refiners, particularly those in China and India, that were previous to last week able to buy Russian oil are now scrambling to buy it from elsewhere after the newly implemented sanctions on the Russian energy space, particularly the ships that transport its oil. In response, the price of oil continues higher by almost $2 for both brent and WTI to a level last seen in July last year.
Dollar Treads Water Ahead of CPI, Tariffs Remain in Focus
by Laura Matthews
Reuters.com
Jan 14 (Reuters) – The dollar weakened against the euro on Tuesday but stayed near its highest level in more than two years as cooler-than-expected inflation data following last week’s strong jobs report made it hard to project the Federal Reserve’s next moves on interest rates.
Data showed U.S. producer prices increased moderately in December. Investors had already started to scale back bets on rate cuts as potential U.S. tariffs remained in the spotlight.
The greenback pared gains later in the session as traders cautiously awaited Wednesday’s consumer price index report. Investors have been closely watching economic data to see if it supports the Fed’s cautious stance on rates.
“It’s possible that traders are hedging the other side of the market now before CPI tomorrow, so we’re seeing some pre-release volatility that’s keeping the dollar a touch depressed,” said Helen Given, associate director of trading at Monex USA in Washington. “Tariff stories are the primary driver, it appears, for price action today.”
PPI Inflation Accelerates to +3.3%, Driven by “Core Services,” +4.0%, Both the Worst Readings in Nearly Two Years
by Wolf Richter
Wolf Street
2024, the year of sharp acceleration. Services, accounting for two-thirds of PPI, are where inflation is festering and accelerating.
This time, the prior months’ data of the Producer Price Index were revised up by relatively small amounts, unlike the whopper up-revisions over the past four months. So November’s overall PPI reading was revised up to a year-over-year increase of 3.00%, from 2.98% reported a month ago. So that lack of big up-revisions was refreshing.
But then the December PPI, as reported today by the Bureau of Labor Statistics, accelerated to an increase of 3.31%, driven largely by services, which account for two-thirds of the overall PPI, and which accelerated to 4.03%. Both increases were the worst since February 2023.
PPI Shows Wholesale Inflation Increased Less Than Expected in December
by Josh Schafer
Yahoo! Finance
Wholesale prices rose less than expected in December, a positive sign for the economy amid recent market fears that inflation isn’t falling as quickly as hoped to the Federal Reserve’s 2% target.
Tuesday’s report from the Bureau of Labor Statistics showed that its producer price index (PPI) — which tracks the price changes companies see — rose 3.3% from the year prior, up from the 3% seen in November but below the 3.5% increase economists had projected. On a monthly basis, prices increased 0.2%, below the 0.4% increase economists had expected.
2025: More Inflation, More Asset Bubbles, and More QE?
by Artis Shepherd
Mises.org
Capital markets, monetary policy, fiscal policy. The extent to which these three factors intertwine is of no small consequence to the American economy.
On one hand, loose monetary policy generally enables the politically-desired fiscal policy—big deficit spending—by lowering the cost at which governments borrow. Loose money also enables rising asset prices through compression of cap rates—a shorthand valuation method wherein discount rates to future cash flows (which are themselves subject to increasingly fantastical projections as interest rates decline) are lowered, thus increasing present value.
In turn, rising asset prices provide political cover by creating a wealth illusion—a politically useful context in which high asset values belie weak fundamental performance in the main street economy. Thus, governments receive less pushback on price inflation and profligate government spending while Americans are distracted by increasing brokerage account balances.