U.S. inflation ticked higher last month, in latest sign of persistent price pressures

WASHINGTON (AP) — An inflation gauge closely watched by the Federal Reserve rose slightly last month, the latest sign that some consumer prices remain stubbornly elevated, even as inflation is cooling in fits and starts.

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, prices increased 2.8% compared with a year ago, the same as in November and October.

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.

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.

Overall inflation climbed 0.3% in December from the previous month, driven higher by a jump in gas prices. Monthly increases at that level, if they continued, would exceed the Fed’s target.