18.01.201700:55:00UTC+00U.s. Annual Cpi Likely to rise 2.2 Pct in December, Well Above the Fed’s Target

The United States consumer inflation for December is expected to be released on Wednesday at 13:30 GMT. Markets expect a 0.2 percent rise in the December CPI, coming back above the Fed�s target. Core (ex-food & energy) CPI inflation, of course, has been above the Fed�s target for more than a year.

The 75 percent drop in oil prices between mid-2014 and January-2016 pushed headline inflation below zero at one point and even as recently as July of last year it was still running at a lowly 0.9 percent.

Because once oil prices stabilised, headline inflation would come roaring back to meet the core. That�s now happening. West Texas crude prices ran sideways from April to November 2016 at $43/bbl and since then they�ve risen by another $9/bbl to $52-and-change, reported DBS Group Research.

From that lowly 0.9 percent y/y in July 2016, it rose 1.1 percent in August, 1.5 percent in September and 1.7 percent in November. Markets expect it will hit 2.1 percent today, a 4-tick jump in a single month. And all it took was for oil prices to stop falling, they added.