By Jiefei Liu
The U.S. consumer price index rose for a fifth consecutive month in December, driven by rising shelter and gasoline prices.
The CPI, which measures the price of everything from cereal to medical care, climbed 0.3 percent from the previous month, and 2.1 percent from a year ago, according to the U.S. Bureau of Labor Statistics.
It was the largest yearly increase in two-and-a-half years and puts consumer price inflation above the Federal Open Market Committee’s 2 percent inflation target.
The core CPI, excluding volatile food and energy prices, increased 0.2 percent from the previous month and rose 2.2 percent from the prior year.
The CPI is expected to continue to rise in 2017, said Strider Elass, economist at First Trust Portfolios LP, in a phone interview, in line with an accelerating U.S. economy.
Reduced business regulation and more favorable tax policies under President-elect Donald Trump should quicken the pace of economic growth, Elass explained.
U.S. gross domestic product advanced by 3.5 percent in the third quarter of 2016, compared with a 1.4 percent increase in the second quarter. Fourth-quarter GDP, due to be released on Jan. 27, is forecast to rise by 2.1 percent, according to economists surveyed by Bloomberg.
The CPI shelter index, a proxy for housing costs, rose 0.3 percent, while gasoline rose 3 percent. Elass said home prices might remain on an upward trend because of increasing demand for housing in a growing economy.
Prices for food bought at grocery stores, paced by fruits and vegetables, declined for the eighth consecutive month. But the decline was offset by an increase in prices for prepared foods outside the home.