Inflation as measured by the Consumer Price Index (CPI) climbed to +7.0% in December, the highest reading in nearly 40 years and a far cry from last December’s print of +1.4%. The CPI’s two largest components, Owners’ Equivalent Rent and Rent of Primary Residence, both continued rising last month as housing costs remain extremely high. The most concerning aspect of the report, however, was the breadth of the prices increases. Inflation by some measures is now the broadest on record, as even some of the more historically disinflationary goods and services are seeing increasing prices. Today’s CPI report likely keeps the Federal Reserve on track to tighten policy in the coming months in an attempt to quell rising prices.
