The Federal Reserve’s preferred inflation gauge cooled further last month, the Associated Press reports, even as the economy kept growing briskly.
Today’s government report showed that prices rose just 0.2% from November to December, a pace broadly consistent with pre-pandemic levels and barely above the Fed’s 2% annual target. Compared with a year ago, prices increased 2.6%, the same as in the previous month.
Excluding volatile food and energy costs, prices also rose just 0.2% from month to month. Compared with a year earlier, so-called “core” prices climbed 2.9% in December — the smallest such increase since March 2021. Economists consider core prices a better gauge of the likely path of inflation.
Today’s price data showed a lower level of inflation than did the most recent consumer price index, released earlier this month, which showed inflation at 3.4% in December. The more widely known CPI shows higher inflation than the Fed’s preferred measure partly because it puts greater weight on housing and rents, for which prices are higher than many other goods and services.
