Inflation rose 2.9% on an annual basis in December, with the latest Consumer Price Index illustrating the Federal Reserve’s challenge in battling stickier-than-expected price increases.
Last month’s CPI was forecast to come in at 2.8%, according to economists surveyed by financial data firm FactSet. The Consumer Price Index, a basket of goods and services typically bought by consumers, tracks the change in those prices over time.
The Federal Reserve began cutting rates in September following a flurry of hikes that helped tame inflation after it hit a four-decade high of 9.1% in June 2022. Yet the Fed has struggled with the last leg of its inflation battle in pushing the CPI to a 2% annual rate, and December’s reading could convince the central bank to hold off on another rate cut at its next meeting, scheduled for Jan. 29.
At the same time, economists are expressing concern about the incoming Trump administration’s economic plans — a mix of new tariffs, tax cuts and mass deportations — which they say could reignite inflation.
“Progress toward the Fed’s 2% inflation target has stalled,” Seema Shah, chief global strategist at Principal Asset Management, said in an email before the CPI report. “The proposed increase in tariffs by the incoming administration is adding to inflation concerns.”
—This is a breaking story and will be updated.
