Washington: Government data released on Thursday indicated that consumer inflation in the US increased more than expected in December, despite the fact that underlying pressures still seem to be decreasing.
US consumer inflation: A major indicator of inflation, the Department of Labor’s consumer price index (CPI) was higher in November and up 3.4% from a year ago.
But in the final month of 2023, a “core” metric—which eliminates fluctuating food and energy prices—cooled to 3.9 percent.
Accelerating inflation might put more pressure on the Federal Reserve, even though economists do not anticipate that officials will rely their rate decisions on data from just one month.
Beginning in early 2022, policymakers quickly raised interest rates, and they have maintained them there in an effort to moderate demand and gradually reduce inflation.
The intention is to reduce demand by making saving more enticing than spending.
Inflation has decreased dramatically from the 9.1% peak in June 2022, even with the December CPI rise, and consumer expenditure and the labour market have remained strong.
This has raised expectations for the largest economy in the world to experience a so-called “soft landing,” in which inflation declines without a catastrophic recession.
The CPI increased by 0.3 percent in November and December compared to the same month last year.
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