Consumer Inflation in the U.S Climbed 0.4%. How does it affect investments in the U.S

Prices of consumer goods and services — the cost of living — rose in December at the fastest clip since last summer as Americans paid more for gas.

The consumer price index advanced 0.4% last month, the government said Wednesday, marking the largest gain since August. Economists polled by Dow Jones and The Wall Street Journal had forecast a 0.4% gain.

Yet the pace of inflation over the past year was still quite low at 1.4% with the yearly rate increasing from 1.2% last month due to higher gasoline prices- despite the fact that gasoline prices are still 15% below year-ago levels. “People are staying home and driving less during the pandemic and there’s not as much demand for fuel.”

Just so you know, before the pandemic began in March, consumer inflation in the U.S was running at 2.3%, much higher than what is obtainable now.

Likewise, the cost of food, i.e groceries and eating out, increased 0.4% last month.

To put it into perspective, If gas and food are excluded, the rate of inflation rose a smaller by 0.1%, in December and this is based on a less volatile “core” measure of prices.

The core rate of inflation over the past year was unchanged at 1.6% for the third month in a row. Prices of other important consumer goods and services were mixed, but prices for used vehicles, medical care, drugs and recreation all declined.

Now down to the big picture, Investors are talking about inflation again, but it’s likely to hover below 2% through the early parts of this year and probably won’t pose a threat to the U.S economy this year or next.

For its influence on the market, the Dow Jones Industrial Average DJIA, -0.06% and S&P 500 SPX, 0.17% Opened lower in trade today.