- Consumer Prices in U.S. Rise for Fifth Month on Shelter, Gas
The cost of living in the U.S. climbed for a fifth month on the back of shelter and fuel prices, pushing inflation closer to the Federal Reserve’s goal.
The consumer-price index rose 0.3 percent in December, matching the median projection of economists, after a 0.2 percent gain the previous month, Labor Department figures showed Wednesday in Washington. Prices were up 2.1 percent from a year earlier, the most since June 2014. Excluding volatile food and fuel, the so-called core measure rose 0.2 percent from November.
With energy moving higher and rents and medical costs continuing to firm up, price pressures are gaining traction in the world’s largest economy. Steady demand would allow companies to regain pricing power, further boosting inflation and strengthening the case for the Fed to keep raising interest rates this year.
“The overall narrative is, inflation is accelerating,” said Tom Simons, a senior economist at Jefferies LLC in New York. “We’re seeing broad-based, modest increases in prices. The Fed is going to be pleased” with these numbers.
Bloomberg survey estimates for the consumer price index ranged from gains of 0.2 percent to 0.5 percent.
The year-over-year rise in the consumer price gauge followed a 1.7 percent advance the prior month.
The core CPI measure increased 2.2 percent from December 2015, after rising 2.1 percent in the prior 12-month period. Both the monthly and year-over-year gain matched the median forecasts of economists surveyed by Bloomberg.
The Fed’s preferred gauge of inflation, which is the Commerce Department’s personal consumption expenditures price measure, rose 1.4 percent in November from a year earlier; it hasn’t matched the central bank’s 2 percent goal since April 2012. Policy makers will next meet Jan. 31-Feb. 1.
Energy costs increased 1.5 percent from a month earlier, as gasoline rose 3 percent, the CPI report showed. Food prices were unchanged for a sixth month.
Expenses for shelter climbed 0.3 percent, reflecting a similar gain in owners-equivalent rent, one of the categories designed to track rental prices.
Airfares increased 1.9 percent, the most since June 2015. Americans paid 0.1 percent more for new automobiles, while used-car prices rose 0.5 percent, the biggest jump since April 2015. Clothing prices declined 0.7 percent, the second straight drop.
The CPI is the broadest of three price gauges from the Labor Department because it includes all goods and services. About 60 percent of the index covers prices consumers pay for services from medical visits to airline fares, movie tickets and rents.
The rising cost of living cut into paychecks in December, a separate report from the Labor Department showed Wednesday. Hourly earnings adjusted for inflation rose 0.1 percent from the prior month. They were up 0.8 percent over the past 12 months.
Gold Gained Ahead of Joe Biden Inauguration 2021
Gold price rose from one and a half month low on Tuesday ahead of President-elect Joe Biden’s inauguration on Wednesday.
The precious metal, largely regarded as a haven asset by investors, edged up by 0.2 percent to $1,844.52 per ounce on Tuesday, up from $1,802.61 on Monday.
He said, “The key factor appears to be the (U.S.) currency.”
As expected, a change in administration comes with the change in economic policies, especially taking into consideration the peculiarities of the present situation. In fact, even though Biden, Janet Yellen and the rest of the new cabinet are expected to go all out on additional stimulus with the support of Democrats controlled Houses, economic uncertainties with rising COVID-19 cases and slow vaccine distribution remained a huge concern.
Also, the effectiveness of the vaccines can not be ascertained until wider rollout.
Still, which policy would be halted or sustained by the incoming administration remained a concern that has forced many investors to once again flee other assets for Gold ahead of tomorrow’s inauguration.
Crude Oil Holds Steady Above $55 Per Barrel on Tuesday
Brent Crude oil, against which Nigerian crude oil is priced, rose from $54.46 per barrel on Monday to $55.27 per barrel as of 9:03 am Nigerian time on Tuesday.
Last week, Brent crude oil rose to 11 months high of $57.38 per barrel before pulling back on rising COVID-19 cases and lockdowns in key global economies like the United Kingdom, Euro-Area, China, etc.
While OPEC has left 2021 oil demand unchanged and President-elect Joe Biden has announced a $1.9 trillion stimulus package, experts are saying the rising number of new cases of COVID-19 amid poor vaccine distribution could drag on growth and demand for oil in 2021.
On Friday, Dan Yergin, vice-chairman at IHS Markit, said in addition to the stimulus package “There are two other things that are going with it … one is of course, vaccinations — in the sense that eventually this crisis is going to end, and maybe by the spring, lockdowns will be over.”
“The other thing is what Saudi Arabia did. This is the third time Saudi Arabia has made a sudden change in policy in less than a year, and this one was to announce (the) 1 million barrel a day cut — partly because they are worried about the impact of the surge in virus that’s occurring,” he said.
Also, the stimulus being injected into the United States economy could spur huge Shale production and disrupt OPEC and allies’ efforts at balancing the global oil market in 2021.
Crude Oil Pulled Back Despite Joe Biden Stimulus
Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.
Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.
On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.
OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”
“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”
Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.
“The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.
Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.
But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.
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