From Morningstar:

The latest Consumer Price Index report shows that overall price pressures increased in December. The Bureau of Labor Statistics reported that CPI rose 3.4% on an annual basis and 0.3% on a monthly basis in December, higher than economist expectations of 3.2%. More than half the monthly gains were due to increases in shelter costs.

Core CPI, which excludes food and energy prices, also rose higher than expected at 3.9% on an annual basis and 0.3% on a monthly basis in December. The headline inflation rate fell sharply over 2023, but progress on the Fed’s inflation fight is expected to be slower and choppier in the coming months.

Core inflation
Core inflation remained relatively steady over the past three months, but much of this stickiness is due to higher shelter costs, which are expected to fall in the months ahead as the data catches up with ongoing declines in rent prices.

Rate cuts
The Federal Reserve is expected to cut interest rates in 2024, with forecasts suggesting a total of three cuts, though bond market investors are expecting at least five. Preston Caldwell, chief US economist at Morningstar, believes the Fed is likely to cut rates in March, based on current data, as the PCE inflation rate is below the central bank’s 2% target.



Read more: US Inflation Rises, But Rate Cuts Still Expected