Inflation rose again in December as stubbornly high prices continued to strain consumers’ finances ahead of the Federal Reserve’s next decision on interest rates.
The Labor Department on Wednesday said that the consumer price index (CPI) – a broad measure of how much everyday goods like gasoline, groceries and rent cost – increased 0.4% in December while ticking up to 2.9% on an annual basis.
The month-to-month reading came in slightly hotter than expected by economists polled by LSEG, while the annual figure was in line with expectations. The headline figure was up compared with November’s reading of 2.7%, while monthly price growth continued at the same pace as a month ago.
So-called core prices, which exclude more volatile measurements of gasoline and food to better assess price growth trends, were up 0.2% on a monthly basis in December, in line with expectations and down from 0.3% the prior month. Core prices were up 3.2% in December compared with a year ago, slightly cooler than expected and down from 3.3% in November.
The report showed that inflationary pressures in the U.S. economy continue to persist despite progress in bringing inflation closer to the Federal Reserve’s 2% target over the past year.
High inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent. Price hikes are particularly difficult for lower-income Americans, because they tend to spend more of their already-stretched paycheck on necessities and have less flexibility to save money.
Energy costs accounted for over 40% of the monthly CPI increase, with the Bureau of Labor Statistics’ energy index rising 2.6% in December after energy prices showed little change in recent months. Gasoline prices were up 4.4% for the month of December.
Food prices also rose in December by 0.3% on a monthly basis. Both food at home and food away from home increased by 0.3% last month.
Housing costs rose by 0.3% in December, the same as the increase observed in November. The shelter index is up 4.6% over the past year, which is the smallest 12-month increase since January 2022.
This is a developing story. Please check back for updates.
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