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US consumer inflation pressures may have eased further in December

The government is expected to report that underlying inflationary pressures eased further in December

By PAUL WISEMAN
Published - Jan 11, 2024, 12:03 AM ET
Last Updated - Jan 11, 2024, 12:03 AM EST

WASHINGTON (AP) — The Federal Reserve, tentatively pleased with progress it's made in fighting inflation, has declared what amounts to a ceasefire: The Fed stopped raising interest rates in July, after imposing an aggressive 11 hikes since March 2022, to take time to see how the economy would respond.

So far, so good.

Inflation has kept slowing, and the economy has withstood the strain of the accumulated higher borrowing costs. Hope is growing that the central bank can achieve a rare “soft landing” by cooling the economy just enough to tame inflation without causing a recession. The financial markets, in fact, seem increasingly optimistic that the Fed can soon begin cutting rates, which would lighten borrowing costs for consumers and businesses.

On Thursday, the Labor Department is expected to report that underlying inflationary pressures eased further in December. Excluding volatile food and energy costs, “core” prices likely rose 0.2% from November, according to a survey of forecasters by the data firm FactSet, down from a 0.3% rise the previous month. And compared with 12 months earlier, core prices are thought to have risen 3.8% in December, down from a 4% year-over-year increase in November.

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