Inflation eases in December, core consumer prices rise at slowest pace since March 2021

Core Insights - Inflation eased in December, with core consumer prices rising at the slowest annual rate since March 2021, at 2.6% year-over-year [1][2] - The overall Consumer Price Index (CPI) increased by 0.3% month-over-month and 2.7% year-over-year, aligning with economists' expectations [2] Inflation Trends - Core CPI's 2.6% increase matches November's rate, indicating persistent inflation above the Federal Reserve's 2% target, although it has been declining over the past year [2][3] - The inflationary pressures on household food budgets remain significant, with food prices rising 0.7% in December, outpacing overall price increases [6] Sector-Specific Changes - The price of used cars and trucks decreased by 1.7% in December, contributing to lower core consumer prices [8] - Airline fares fell by 0.5%, and the overall transportation services category also saw a 0.5% price drop [8] - Energy costs contributed to the rise in headline prices, with gas prices falling by 5.3% in December, leading to a 2% decrease in the energy index from the prior month [8] Market Reactions - Following the December CPI report, market data indicated a 95% probability that the Federal Reserve would keep interest rates unchanged during its upcoming meeting [4]