Inflation rose 2.9% on an annual basis in December, with the latest consumer price index reflecting the Federal Reserve's challenge in dealing with larger-than-expected price rises.
Last month's CPI was expected to come in at 2.8%, according to economists surveyed by financial data firm FactSet. The consumer price index, a basket of goods and services typically purchased by consumers, tracks changes in those prices over time.
The Federal Reserve began cutting rates in September after the hike helped control inflation after it hit a four-decade high of 9.1% in June 2022. Yet the Fed has struggled to push the CPI up in the final stages of its inflation battle. 2% annual rate, and the December reading could convince the central bank to hold off on another rate cut at its next meeting on January 29.
Still, there are some signs of progress in the Fed's inflation fight. Core CPI, or prices excluding volatile energy and food costs, rose 3.2% on an annual basis, less than the 3.3% rate expected by economists.
“Following recent red-hot data, the softer-than-expected core CPI reading today helps calm fears of a resurgence in inflation,” Tina Adatia, head of fixed income client portfolio management at Goldman Sachs Asset Management, said in an email. Will get.” “Although today's release is likely insufficient to put a January rate cut on the table, it strengthens the case that the Fed's cut cycle has not yet done its job.”
At the same time, economists are expressing concern about the incoming Trump administration's economic plans — a mix of new tariffs, tax cuts and mass deportations — which they say could stoke inflation again.
“Progress toward the Fed's 2% inflation target has stalled,” Seema Shah, chief global strategist at Principal Asset Management, said in an email ahead of the CPI report. “Proposed increases in tariffs by the incoming administration are raising inflation concerns.”
Prices rose in December due to higher prices for gasoline, which rose 4.4% from the previous month, as well as food and lodging. report Released on Wednesday by the Bureau of Labor Statistics.