Higher rents and food prices boosted overall U.S. inflation in December, according to the Associated Press, a sign that the Federal Reserve’s drive to slow inflation to its 2% target will likely remain a bumpy one.
Today’s report from the Labor Department showed that overall prices rose 0.3% from November and 3.4% from 12 months earlier. Those gains exceeded the previous 0.1% monthly rise and the 3.1% annual inflation in November.
Excluding volatile food and energy costs, though, so-called “core” prices rose just 0.3% month over month, unchanged from November’s increase. Core prices were up 3.9% from a year earlier, down from November’s 4% year-over-year gain. Economists pay particular attention to core prices because, by excluding costs that typically jump around from month to month, they are seen as a better guide to the likely path of inflation.
Overall, inflation has cooled more or less steadily since hitting a four-decade high of 9.1% in mid-2022. Still, the persistence of elevated inflation helps explain why, despite steady economic growth, low unemployment, and healthy hiring, polls show many Americans are dissatisfied with the economy — a likely key issue in the 2024 elections.
