U.S. headline inflation seems to have reached 2 pct in December, says Societe Generale

The U.S. headline inflation is expected to finally reach the target rate of 2 percent. The CPI has been slowly moving higher since August and rose to 1.7 percent in November. According to a Societe Generale research report, the headline gauge is expected to have reached 2 percent in December after holding below that level since June 2014.

Prices of gasoline prices might have increased by about 3.2 percent seasonally unadjusted or around 4.3 percent on a seasonally adjusted basis. This might have contributed about 0.14 percentage points to the rise in the seasonally adjusted figure, which is likely to have risen 0.22 percent. Some of the rise from gasoline might be countered by continued weakness in food prices, which might have dropped 0.2 percent.

In the meantime, the core CPI might have gained 0.2 percent that might leave the year-on-year rate stable at 2.1 percent. In December, apparel prices might have recorded a 0.4 percent decline after a 0.55 percent drop in November, as discounting about the holidays probably continued. Airfares are also expected to have dropped 0.9 percent. In the meantime, hotel rates might have increased 0.2 percent and the new car prices are likely to have remained flat, while used car prices might have risen 0.2 percent, added Societe Generale.

Meanwhile, medical care prices are likely to have risen 0.23 percent in December after staying flat in October as well as in November. Most of the weakness in November was focused in medical care commodities, particularly prescription drugs that dropped 0.6 percent. Education costs might have increased 0.3 percent, whereas the recreation, communication and other goods and services indices might have been little changed. OER and Rent possibly maintained a 0.3 percent increase.