WASHINGTON (AP) — An inflation gauge closely watched by the Federal Reserve rose slightly last month, while some underlying prices pressures showed signs of easing.
The latest inflation figures arrive as President Donald Trump has threatened to impose big import taxes on goods from Canada and Mexico, potentially affecting everything from autos to avocados, which could push prices higher in the coming months.
Friday’s report from the Commerce Department showed that consumer prices rose 2.6% in December from a year earlier, up from a 2.4% annual pace in November and the third straight increase. Excluding the volatile food and energy categories, core prices increased 2.8% compared with a year ago, the same as in November and October.
There were some positive signs in Wednesday’s report, however. When measured in shorter time frames, inflation is slowing: In December, core prices ticked up 0.2% from the previous month, a pace that is nearly consistent with the Fed’s annual target. Economists — and Fed officials — pay close attention to core prices because they provide a better read on where inflation is headed.
The figures arrive just two days after Federal Reserve officials, led by Chair Jerome Powell, decided to pause their interest rate cuts in part because inflation has largely been stuck at about 2.5%, above their 2% target, for the past six months.