U.S. inflation likely to have moderated in December – TD Economics

U.S. inflation is likely to have moderated in December. According to a TD Economics research report, the headline consumer price inflation is expected to have moderated to 2.1 percent year-on-year in December, with prices rising to a seasonally adjusted 0.1 percent. Energy prices are expected to be a net positive, driven by higher gasoline prices but partly countered by higher natural gas and electricity prices. A cautious view is maintained on grocery prices, which have dropped in the earlier four months.

Stripping food and energy, core inflation is expected to have come in at 0.2 percent on a sequential basis after disappointing with a comparatively subdued 0.1 percent rise in November, stated TD Economics.

Most of the prior month’s weakness, markedly in hotel prices, airfares and physician’s services, is expected to have reversed, with the exception of apparel. The projection implies that core inflation should stabilize at 1.7 percent year-on-year.

“Going forward, USD weakness and rising commodity prices should provide a net tailwind and allow core prices to firm gradually over the course of 2018”, added TD Economics.

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