US Inflation Eases Again in December as Price Growth Slows
In December, overall inflation in the United States continued its stretch of cooling, marking the sixth straight monthly decline and bringing the annual rate to 6.5 percent. This figure sits a notable 0.6 percentage point lower than the previous month, signaling a softer pace of price growth overall. The data was released by the Bureau of Labor Statistics (BLS).
On a month-to-month basis, consumer prices slipped by 0.1 percent, a small but meaningful tell in the ongoing effort to gauge whether the Federal Reserve can steer inflation toward a more stable footing. Market watchers are keenly watching whether the Fed’s policy moves will translate into lasting price relief for households across the country.
The monthly decline was driven largely by the energy sector, with the gasoline index falling sharply by 9.4 percent. Food costs, however, rose modestly, ticking up by 0.3 percent in the final month of the year, reflecting the uneven path that inflation can take across different categories.
More broadly, the headline inflation rate of 6.5 percent represents the lowest level since October 2021, underscoring the progress that has been made in taming price growth over the last year. Excluding energy and food, the core inflation measure registered 5.7 percent on a year-over-year basis, increasing by 0.3 percentage points in the latest reading.
The December inflation report arrives at a moment of heightened attention on whether monetary policy is achieving the desired effect. The Federal Reserve has implemented a sequence of rate increases, with a total of seven hikes since March. The most recent move raised rates by a smaller amount than previous rounds, signaling that policymakers may pause or slow further increments for the near term, though decisions remain data dependent. The upcoming Federal Open Market Committee (FOMC) meeting, scheduled for January 31 to February 1, will be closely watched for guidance on the path ahead.
Federal Reserve Chairman Jerome Powell has reiterated that inflation data will weigh heavily in future policy choices. The December numbers provide a crucial data point in assessing whether the current trajectory can be sustained and how it might shape the committee’s stance in early 2025. Analysts will parse the report for insights into which sectors contribute to resilience or weakness, and how long the road to the Fed’s 2 percent target may remain challenging. The broader market response will hinge on interpreting whether recent deceleration is persistent or temporarily cushioned by one-off influences. The ongoing dialogue between inflation signals and policy actions continues to drive expectations for households, businesses, and financial markets alike.
(Source attribution: Bureau of Labor Statistics; Federal Reserve communications)