Inflation rose across the United States last month, according to the latest consumer price report under the biden administration.
donald trump has promised to lower prices for millions of Americans. But while price increases have slowed sharply from their post-pandemic peak of 9.1%, the pace of inflation remains higher than the Federal Reserve2% annual target.
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The consumer price index (CPI) rose at an annual rate of 2.9% in December, up from 2.7% the previous month, and in line with expectations, according to official data. In monthly terms, the index rose 0.4%.
However, core inflation appeared to soften, reviving confidence on Wall Street that the Federal Reserve will cut interest rates further later this year.
The closely watched “core” index, which excludes volatile food and energy prices, rose 3.2% in December, slightly below its annual rate of 3.3% in November, and less than expected. In monthly terms, it fell – for the first time in six months – to 0.2%.
Borrowing costs fell sharply, with the 10-year US Treasury yield – a benchmark for global borrowing costs – down 11.9 basis points, to 4.669%, and on track for its biggest daily drop since late November.
Stocks also rose, with solid bank profits also providing a boost. The S&P 500 and the Dow Jones Industrial Average each rose about 1.6% in New York.
Related: Fed fears Trump’s policies could hamper efforts to reduce US inflation, minutes show
During the election campaign, the incoming president repeatedly promised to lower the prices of goods, including groceries, which have risen significantly in recent years. However, since winning the elections he has recognized that doing so will be very difficult.
The latest CPI reading, released days before the Biden administration hands the White House to Trump and his officials, underscores how difficult it will be for them to deliver on their promises to lower the cost of living.
Prices not only continue to rise; They rose at a faster rate in December than in November, and inflation remains above the 2% target level of Federal Reserve authorities.
Vehicle prices and airfares rose, in what Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, described as a “temporary” boost that somewhat skewed the headline numbers. “Both the 0.5% increase in new vehicle prices and the 1.2% increase in used car prices likely reflect strong replacement demand after major hurricanes,” he said. “In addition, the busy holiday travel season was responsible for the 3.9% increase in airfares in December.