WASHINGTON — Consumer prices accelerated at their swiftest pace in nearly 12 months during December, according to federal data released Friday that highlights how costs continue climbing beyond what most families want to see.
The Commerce Department reported that monthly prices jumped 0.4% in December compared to November’s 0.2% increase, marking the steepest monthly climb since February of last year. The report’s release was postponed due to the recent six-week federal government shutdown. When measured against December of the previous year, consumer costs surged 2.9%, exceeding November’s 2.8% annual rate and representing the largest yearly jump since March 2024.
When examining core pricing data — which strips out unpredictable food and fuel costs — the monthly increase also hit 0.4% in December, doubling November’s 0.2% figure and matching the highest level since last February. Annual core inflation climbed to 3% in December, surpassing the prior month’s 2.8% rate.
These numbers demonstrate that price pressures remain stubbornly high, despite falling from the nearly 7% peak witnessed in 2022. Since many everyday costs continue rising more rapidly than pre-pandemic levels, this data helps explain why numerous Americans feel dissatisfied with economic conditions, even with unemployment staying low and economic expansion remaining steady.
The data reflects the personal consumption expenditures price index, which Federal Reserve officials favor over the more widely recognized consumer price index. Government figures released last week showed the CPI moderated significantly in January.
However, the PCE measurement runs higher than the consumer price index because it assigns less importance to sectors where price growth has dramatically slowed, including apartment rental rates and vehicle costs.
Friday’s data also revealed that consumer spending maintained strong momentum in December, with expenditures rising 0.4% from the previous month, matching November’s pace.
During December, costs increased for home furnishings, apparel, and food items. While gasoline prices declined, electricity expenses grew and natural gas bills skyrocketed 3.7% in just one month.
The Federal Reserve’s rate-setting panel convened in late January and decided to maintain its benchmark interest rate at approximately 3.6%, despite persistent pressure from President Donald Trump to lower borrowing costs. Meeting notes released Wednesday indicated that most policymakers prefer to see inflation move closer to the Fed’s 2% goal before considering additional rate reductions.
