US inflation eased in December as core CPI rose at its slowest annual rate since March 2021, signaling that price pressures are easing toward the end of the year.
Core CPI rose 0.2% month-on-month and 2.6% year-on-year, in line with market expectations, while headline CPI rose 0.3% month-on-month and 2.7% year-on-year.
While inflation remains above the Fed’s 2% target, policymakers see risks to the labor market as a more pressing concern.
Recent jobs data showing the unemployment rate falling has reinforced expectations that the Fed will keep interest rates on hold at its January meeting.
Declines in energy, used vehicle and airline prices helped ease inflation, although food costs continued to weigh on households.
