The US Consumer Price Index rose 0.4 percent from November, driven by a sharp increase in egg prices and groceries, while the core inflation measure remained steady at 3.2 percent. This marks the fastest one-month increase since February and suggests that the Federal Reserve’s efforts to combat inflation may be stalling.
Despite cooling inflation since 2022’s four-decade high, progress has slowed or even stopped in recent months. Economists say the pace of inflation remains disappointing, with grocery prices rising again and gas prices jumping 4.4 percent in December. This news is unlikely to ease concerns among policymakers, who have been watching inflation closely.
Stock markets reacted positively to the data, with the S&P 500 rising 1.8 percent, its best one-day performance since November’s election. However, investors expect interest rates to remain steady at the Fed’s meeting later this month, breaking a streak of rate cuts. Economists say policymakers may not lower rates at all this year due to a stabilizing labor market and strong job growth.
While inflation in housing has eased, services prices continue to cool, and wholesale prices rose more slowly in December. However, President-elect Donald J. Trump’s policies on tariffs, immigration, and taxes pose new uncertainty, which could push up prices further. The Fed is likely to wait for clearer information on the administration’s plans before making any decisions.
The Federal Reserve has expressed growing concern about slow inflation progress, but most officials still expect it to cool gradually. Economists agree that there’s reason to be optimistic, but policymakers are facing a new source of uncertainty and will need time to assess the impact of the incoming administration’s policies on the economy.
Source: https://www.nytimes.com/2025/01/15/business/economy/inflation-december-economy.html