U.S. monthly consumer prices rose less than initially estimated in December, revised government data showed Friday.
The consumer price index rose 0.2% in December instead of 0.3% as reported last month, annual revisions of the CPI data published by the Labor Department’s Bureau of Labor Statistics (BLS) showed. But data for November was revised up to show the CPI increasing 0.2% rather than 0.1% as previously estimated.
The revisions emanated from the recalculation of seasonal adjustment factors, the model used by the government to strip out seasonal fluctuations from the data. This routine procedure, which the BLS undertakes every year, covered data from January 2019 through December 2023. The year-on-year data, which is not seasonally adjusted, was unrevised.
Excluding the volatile food and energy components, the CPI advanced by an unrevised 0.3% in December.
After the revisions last year showed inflation running a bit warmer in the second half of 2022 than previously reported, the revised CPI data for 2023 have been eagerly awaited by Federal Reserve officials, including Governor Christopher Waller, as they try to gauge progress in their fight against inflation.
The CPI inflation readings for the fourth quarter will have an impact on the personal consumption expenditures (PCE) price indexes, the inflation measures tracked by the U.S. central bank for its 2% inflation target.
The core CPI increased 3.9% on a year-on-year basis in December. It is running ahead of the core PCE price index, which gained 0.2% on the month and rose 2.9% year-on-year in December.
Financial markets are anticipating that the Fed will start cutting interest rates sometime in the first half of the year. Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25% to 5.50% range.
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