US Consumer Price Index drops to lowest level in months

The US Labor Department releases data that shows US consumer prices are down.

US money in consumer price index Source: Bloomberg

The US Consumer Price Index (CPI) falls to lowest levels in months. The US Labor Department noted that the index fell 0.1%, its lowest amount since March 2018.

Gas prices down, housing prices up

The US CPI had positive news with gasoline prices going down as the US ramps up more oil production. In December 2018, gasoline prices sank by 7.5%. Amounts charged for plane tickets, and used cars, and prescription drugs declined.

While US consumers saved money on gas and medicine, they spend more on hospital visits, housing and rent. Healthcare costs rose by 0.3%, while the cost of housing and rent increased by 0.2% in December 2018.

What does US Consumer Price Index data mean for the Fed?

The mostly positive news about consumer prices could be bad news for investors watching the US Federal Reserve. Many investors want the Fed to delay interest rate increases. Financial experts like, James McCann, senior global economist at Aberdeen Standard Investments, believes that the risk of rate hikes is low since there is less concern about inflation.

However, other financial analysts like, Sam Bullard, senior economist at Wells Fargo believes that good news about inflation holding steady could mean the Fed elevating interest rates in the future.

‘If core inflation holds firm, the Fed will continue to consider additional rate hikes this year,’said Bullard.

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