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

Core Inflation Insights - Core consumer prices rose 0.2% month-over-month and 2.6% year-over-year in December, marking the slowest annual rate since March 2021 [1][2] - The 2.6% increase in core CPI matches the rise reported in November, indicating a consistent trend in inflation moderation [2] Headline Inflation Data - Headline consumer prices increased by 0.3% over the previous month and 2.7% over the prior year, aligning with economists' expectations [2] - The Federal Reserve's target inflation rate remains at 2%, with current inflation still above this target [3] Economic Context - The December jobs report indicated a decrease in the unemployment rate, reinforcing expectations that the Federal Reserve will maintain current interest rates in its upcoming meeting [4] - Market data suggests a 95% probability that the Federal Reserve will keep rates unchanged following the January meeting [4] Food Price Dynamics - The index for food rose 0.7% in December, indicating notable inflation pressures on household food budgets, outpacing overall price increases [5] - Five out of six major grocery store food groups experienced price increases in December, with only the cost of meat declining by 0.2% [6] Transportation Costs - A significant factor in the moderation of core consumer prices was a 1.7% drop in the price of used cars and trucks, along with a 0.5% decrease in airline fares and overall transportation services [7]