Egg prices rise as US inflation rises

A surge in energy and food prices hit the US last month, as progress in stabilizing prices remained elusive.

The Labor Department said prices rose an average of 2.9% in December from a year earlier, up from 2.7% in November.

Energy prices were responsible for more than 40% of the increase in inflation last month, according to the monthly report. It also revealed that egg prices increased by more than 36% compared to 2023 as bird flu affected supplies and led to shortages.

But prices of other commodities rose less than expected during the month, allaying market fears that the US central bank may have to act more aggressively to stabilize prices.

So-called core inflation – which often reflects fluctuations in food and energy prices – was up just 3.2% from December 2023 and just 0.2% from November, rising less than analysts had expected.

Economists say the metric is a better indicator of underlying trends.

Seema Shah, chief global strategist at Principal Asset Management, said the latest data should “relieve some of the concerns that the US is in the early stages of a second wave of inflation” but warned that it is unlikely to keep the panic at bay for long. .

“Perhaps the main takeaway is that the market is likely to be jittery during the next few data releases as investors look for a story they can be comfortable with for more than a few days at a time.”

Inflation, the rate of price increase, in the US has declined significantly since 2022, when it exceeded 9%.

Investors were expecting that the Federal Reserve, which raised rates to the highest level in more than two decades to fight the problem, would cut rates this year as a result.

But further progress has been limited in recent months. This, along with a series of strong economic data, has raised doubts about that plan.

Investors are also nervous that President-elect Donald Trump’s plans for tariffs, mass migrant deportations and tax cuts could weigh on prices.

The Fed is widely expected to keep its key rate, now around 4.3%, unchanged at this month’s meeting.