The U.S. inflation report for December being released yesterday could provide another welcome sign that the worst bout of spiking prices in four decades is slowly weakening.
Or it could suggest that inflation remains persistent enough to require tougher action by the Federal Reserve.
Most economists foresee the more optimistic scenario: They think December marked another month in which inflation, though still uncomfortably high, continued to cool.
According to a survey by the data provider FactSet, analysts have predicted that consumer prices rose 6.5% in December compared with a year earlier. That would be down from 7.1% in November and well below a 40-year high of 9.1% in June.
On a month-to-month basis, the economists think prices were flat in December.
Even more significant, a closely watched gauge of “core” prices — which excludes volatile energy and food costs — is expected to have risen just 0.3% from November to December and 5.7% from a year earlier. The Fed closely tracks core prices, which it sees as a more accurate indicator of future inflation, in setting its interest rate policies.
