GET DAILY REPORT FREE
U.S. inflation picked up last month as prices rose for gas, eggs, and used cars, yet underlying price pressures also showed signs of easing a bit.
Wednesday’s report from the Labor Department showed that the consumer price index rose 2.9% in December from a year ago, the highest since July, up from 2.7% in November. It was the third straight increase after inflation fell to a 3 1/2 year low of 2.4% in September.
Yet excluding the volatile food and energy categories, so-called core inflation declined to 3.2%, after remaining stuck at 3.3% for three months in a row.
The slowdown in core price increases was greeted with relief on Wall Street, with Dow Jones futures pricing surging nearly 700 points on the report’s release. Many economists and investors are worried that inflation has gotten stuck above the Fed’s 2% target, after a steady decline in prices in 2023 and for much of last year.
Such concerns have sent interest rates on Treasury securities higher, which has also pushed up borrowing costs for mortgages, cars, and credit cards, even as the Fed has cut its key rate.
Still, the increase in overall consumer prices underscores that inflation remains sticky, even as the threat of potentially inflationary policies from the Trump administration, such as universal tariffs and mass deportations of unauthorized migrants, looms.
Egg prices rose last month, though not as much as many economists feared, moving up 3.2% just in December. An outbreak of avian flu is decimating many chicken flocks, reducing egg supply. Gas prices increased 4.4%, the report said.
The national average price for a gallon of gasoline on Wednesday was $3.09, up 7 cents from last month, but just 2 cents higher than last year at this time.
On a monthly basis, consumer prices rose 0.4% in December, the biggest increase since last March. Core prices climbed just 0.2%, after four straight months of 0.3% increases, a positive sign that some price pressures could be cooling a bit.
