WASHINGTON–At year-end 2023 inflation firmed up a bit according to new data for December, but the pace of price gains fell by almost half during the full year.
The Department of Labor reported the consumer price index was up 0.3% in December from the prior month and increased 3.4% from a year earlier. That compares with November’s 0.1% monthly gain and marks an acceleration from that month’s 3.1% annual increase, the data show.
Core prices, which strip out volatile food and energy items, rose 0.3% in December from November, which would be consistent with the Federal Reserve’s long-term inflation target of 2%. Core prices increased 3.9% from a year earlier, a modest slowing from November’s 4% annual increase.
The data show that in December Americans paid more for rent, auto insurance and dental visits, while furniture, toys and sporting goods fell. Energy costs increased 0.4% on the month driven by a rise in gasoline and electricity prices, on a seasonally adjusted basis, the CPI data show.
Approaching Fed Target
"Core inflation, a reliable predictor of future headline inflation, remained unchanged in December and slightly declined compared to a year ago,” said Dawit Kebede, senior economist with America’s Credit Unions. “This, coupled with reduction in underlying price pressures, indicates that we may be approaching the Federal's Reserve's inflation target this year, despite a slight increase in headline inflation. A soft landing for the economy is increasingly likely ,as unemployment stays low and prices head In the right direction."
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