Consumer prices rose at the fastest annual pace in nearly 40 years last month, setting the stage for the start of Federal Reserve interest rate increases as soon as March – a dramatic shift from the policy timelines projected as recently as a few months ago.    Looking forward, we believe normalizing demand, tighter policy, and increasingly tough comps can support moderating inflation levels in the first half of 2022.

  • Consumer prices (CPI) increased 7.0% year-over-year, in line with forecasts.  In December, the consumer price index (CPI) increased 7.0% compared to the same period a year ago.  Expectations ranged from 6.8% to 7.2% with a median of 7.0%.  Core CPI (excludes food and energy) increased at 5.5% year-over-year.  While price increases were broad-based, Energy costs (+29.3%) and new and used vehicles (+11.8% and +37.3%) were among the larger contributors to the year-over-year increase.
  • Consumer prices (CPI) increased 0.5% month-over-month.  In December, consumer prices as measured by CPI increased 0.5% compared to November.  Expectations ranged from 0.2% to 0.6% with a median of 0.4%.  Used car and truck prices (+3.5%) and shelter costs (+0.4%) were among the largest contributors, while energy prices (-0.4%) fell for the first time since April.