The December Consumer Price Index (CPI) report is out and inflation came in softer than expected during the month. That includes the all-items index minus food and energy rising 0.2% monthly compared to 0.3% in the four months prior. Annually this comes in at 3.2% compared to a 3.3% increase in the previous four months, beating economists’ estimates.
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The December CPI All-Urban Consumers data includes a 0.4% increase month-to-month. That represents a 2.9% increase over the last 12 months. While these inflation metrics are up from the 0.3% and 2.7% reported in November, they match experts’ predictions for December.
Energy and food sectors were key contributors to the December CPI inflation report. The energy index rose 2.6% as gas prices jumped 4.4%. The food index increased by 0.3% with food at home and food away from home rising by 0.3% each.
What This Means for the Stock Market
The stock market is performing well on Wednesday as investors celebrate inflation easing. This could affect the Federal Reserve’s interest rate cut plans. The central bank wants to cut interest rates but warned it might not do so in 2025 to avoid increasing inflation. Slowing inflation may help alter that decision.
However, there could be one problem that keeps that from happening. President-elect Donald Trump will take office next week and he has major plans for the economy. Included in them are heavy tariffs that some economists warn will increase inflation. This could further stall plans to lower interest rates.
What Stocks Will Benefit from High Interest Rates?
When interest rates are high, financial stocks often reap the rewards. Investors saw that this week as several banks and investment companies released strong Q4 2024 earnings. These companies could be poised for further profits if interest rates remain high in 2025. Traders can compare some of these investment options below.
