A key inflation gauge accelerated more quickly than expected in December, signalling that many prices are still rising at a pace that exceeds most Americans' preferences and surpasses the Federal Reserve's annual target of 2%.
December Inflation Data Shows Persistent Pressure
According to a report released by the Commerce Department on Friday, prices increased by 0.4% in December compared to the previous month, up from a 0.2% rise in November. This data was delayed due to the six-week government shutdown that occurred last autumn.
When measured on an annual basis, inflation climbed to 2.9% in December, a slight increase from the 2.8% recorded in November.
Core Prices Also Exhibit Significant Growth
Core prices, which exclude the more volatile categories of food and energy, also rose by 0.4% in December from the prior month, up from 0.2% in November. On a yearly comparison, core prices jumped by 3% in December, accelerating from November's 2.8% increase.
Inflation Remains Elevated Despite Recent Declines
These figures indicate that inflation continues to remain elevated, even though it has decreased significantly from its peak of nearly 7% in 2022. With many prices still rising more rapidly than they did before the pandemic, the report highlights a crucial factor contributing to widespread dissatisfaction with the economy among Americans, despite low unemployment and solid economic growth.
Consumer Spending Holds Steady in December
Friday's report additionally revealed that consumers maintained robust spending levels in December, with expenditure rising by 0.4% from the previous month, matching the rate observed in November. This sustained spending activity underscores the ongoing economic momentum, even as inflationary pressures persist.
