Inflation increased to 2.9% in December, up from the previous month, just days before President-elect Donald Trump takes office. This marks a resurgent bout of inflation, with core inflation rising to 3.2% and food prices increasing by 2.5%. Egg prices soared 36% due to an avian flu outbreak.
The increase in inflation rates raises concerns about the Federal Reserve’s ability to control inflation if interest rates are lowered. The Fed has already indicated worries about the resurgence of escalating inflation, with some policymakers citing uncertainty tied to potential policy changes under Trump.
The data comes after a jobs report last week showed stronger-than-expected hiring in December, which sent the stock market plummeting and bond yields soaring. Economists predict that tariffs proposed by Trump would increase prices paid by US shoppers, further fueling concerns about inflation.
Inflation has slowed dramatically from its peak of over 9% in June 2022, but remains above the Fed’s target rate of 2%. The Fed’s interest rate remains at a historically high level of between 4.25% and 4.5%.
Fed Chair Jerome Powell warned that uncertainty tied to potential policy changes under Trump may lead to a slower pace of future rate cuts. This warning comes as the Fed prepares for its report on Wednesday, which may further delay interest rate cuts if inflation remains high.
Source: https://abcnews.go.com/Business/inflation-report-expected-show-increase-days-trump-takes/story?id=117617440