Announced this morning, the Consumer Price Index increased 0.5% in December, more than expected, and increased 7.0% on annual basis, maintaining high levels from recent months. Monthly prices for Used Cars and Trucks, up 3.5%, and Airline Fares, up 2.7%, were strong while prices for Fuel Oil, down -2.4% for the month, were weak. The core rate, which excludes prices for food and energy, increased 0.6% in December, also more as expected, and increased 5.5% on an annual basis. Overall, very hot consumer price figures and inflationary pressures remain high as the consumption of goods remains above pre-pandemic levels. Increased demand for goods, coupled with supply chain issues, has helped the upward inflationary push in previous months. As virus concerns wane, demand for services should increase, helping reduce some demand for goods and pressure on goods prices. How quickly this dynamic occurs, including how the Federal Reserve adjusts their policy, and whether consumers maintain their spending through this process will all be key for the economy in the coming months. In all, the 10-year U.S. treasury yield ticks lower and equity futures are higher as we head into the market open.
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