Inflation Sped Up in December, a Fresh Challenge for the Fed

Consumer prices rose more quickly in December, the latest sign that the Federal Reserve’s fight against inflation may have stalled.The Consumer Price Index rose 0.4 percent from November, and was up 2.9 percent from a year earlier, the Labor Department said on Wednesday.That represented a modest acceleration from November on both a monthly and an annual basis.The “core” measure of inflation, which strips out volatile food and fuel prices to give a better sense of the underlying trend, was more encouraging: The index rose 3.2 percent from a year earlier after three straight months of 3.3 percent gains.

Forecasters had not expected core inflation to slow.Inflation has cooled substantially since the middle of 2022, when it hit a four-decade high of more than 9 percent.More recently, however, progress has slowed, or even stopped outright: By some measures, inflation hardly improved in 2024.“When you step back and look at the overall state of inflation, we’re not really going anywhere,” said Sarah House, senior economist at Wells Fargo.

“While there has been progress, the pace has been really disappointing.”Even before Wednesday’s data, officials at the Fed had voiced increasing concern about the slow progress on inflation.At the same time, the continued strength of the labor market — including data released last week showing unexpectedly strong job growth in December — has made policymakers less worried that their efforts to rein in price increases were leading to layoffs or causing damage to the broader economy.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access.

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