US Consumer Prices Post Largest Gain In Nine Months; Underlying Inflation Slowing

• U.S. consumer prices increased by the most in nine months in December amid higher costs for energy goods, pointing to still-elevated inflation that aligns with the Federal Reserve's projections for fewer interest rate cuts this year.
• Consumer prices increased 2.9% in 2024, slowing from 4.1% in 2023. Progress bringing inflation back to its target recently hit a snag. Consumers' inflation expectations soared in January, with households concerned that tariffs would raise goods prices.
• A resilient economy, the threat of broad tariffs on imported goods and mass deportations of undocumented immigrants - actions that are deemed inflationary - have led the Fed to project a shallower rate-cut path this year. President-elect Donald Trump, who will be inaugurated next week, has also pledged tax cuts, which would fuel economic growth.
• There were, however, some hopeful signs in the fight against inflation, with the report from the Labor Department on Wednesday showing a measure of underlying price pressures subsiding after barely budging for four straight months.
• That raised prospects of tame monthly readings in the inflation gauges watched by the U.S. central bank for its 2% target and prompted financial markets to bet on a rate cut in June.  No rate cut is expected at the Fed's Jan. 28-29 policy meeting.

(Source: Reuters)