**MNI 5 THINGS: US Dec CPI -0.1% On Energy; Core +0.2%>

--5 Things We Learned From The December CPI Data

By Kevin Kastner, Shikha Dave and Harrison Clarke

     WASHINGTON (MNI) - The following are the key points from the 

Consumer Price Index data for December released by the Bureau of Labor 

Statistics Friday: 

     - December CPI fell 0.1% (-0.057% unrounded) month/month overall on 

the largest drop in energy in nearly three years, slightly ahead of the 

0.2% decline expected by analysts, but softer than the flat reading 

expected by market participants. Additionally, core CPI was up 0.2%, on 

expectations, which should give some inflation-watchers some momentary 

relief. The FOMC said it the minutes of its last meeting that some 

participants believe the impact of low energy prices to be temporary. 

     - As a result of the 0.1% decline for overall CPI, the year/year 

rate fell to +1.9% from +2.2% in November, hitting its lowest point 

since August 2017. Excluding only energy, the year/year rate would have 

been +2.1% and the year/year rate for core prices stayed at +2.2%, 

showing that underlying inflation remains fairly steady just slightly 

above 2%. 

     - Core CPI was +0.210% unrounded, slightly on the high side of 

+0.2%, with the major components showing no explosive gains. The large 

owners' equivalent rents category rose 0.2% and medical care was up 

0.3%, but new vehicle prices were flat, apparel prices were flat, and 

used vehicle prices fell 0.2% after a large gains in October and 

November. 

     - Energy prices fell by 3.5% in December after a 2.2% drop in 

November, with gasoline prices down 7.5%. Electricity prices rose 0.7% 

and gas utilities prices rose 5.6% to provide some offset. CPI excluding 

only energy was 0.2%, continuing the recent string, food prices were up 

0.4% on widespread gains. 

     - MNI analysis showed analysts are fairly accurate when predicting 

both overall and core CPI, so today's data maintain that trend. The data 

should also kept concerns about runaway inflation at bay. Given the lack 

of data from the Commerce Department, the FOMC is likely to weigh the 

CPI data heavier than normal in its discussions at the next meeting.  

     ** MNI Washington Bureau: 202-371-2121 ** 

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