Pantheon Macroeconomics chief economist Ian Shepherdson said the reported increases in used-car prices don’t square with data from vehicle auctions. That suggests that used-car costs in the CPI may “fall sharply over the next few months,” dragging down core inflation, though a tighter labor market will keep putting upward pressure on prices, Shepherdson wrote in a note.
A separate report released Wednesday by the Labor Department showed average hourly earnings adjusted for inflation rose 0.8 percent from November 2017, the biggest increase in more than a year. Wage gains have gradually picked up amid a tight job market, while muted inflation overall may have brought some respite to consumers.
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Shelter costs, which account for about a third of the CPI, rose 0.3 percent from the prior month following a 0.2 percent gain. That reflected increases in both owners-equivalent rent, one of the categories designed to track rental prices, as well as rent of primary residence. Prices for medical care rose 0.4 percent, the most since June; these readings often vary from results for this category within the Fed’s preferred measure of inflation due to different methodologies. 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 the prices that consumers pay for services ranging from medical visits to airline fares, movie tickets and rents.
This article provided by Bloomberg News.