Inflation up 0.4% in December, 2.9% for 2024

The Consumer Price Index increased 0.4% in December, resulting in a 12-month inflation rate of 2.9%, according to the Bureau of Labor Statistics. Economists has predicted 0.3% and 2.9% respectively.

Excluding the volatile food and energy categories, the annual rate was 3.2%, which was better than the forecasted 3.3%.

The biggest contributor to higher inflation came from a 2.6% increase in energy prices for the month, including a 4.4% increase in gasoline, accounting for nearly 40% of the index’s gain. Food prices were also up 0.3% for the month and 2.5% year over year.

Medical care costs rose 0.2% in December and 3.4% year over year, while medical commodities were flat for the month and only up 0.5% year over year. Shelter prices were up 4.6% year over year, but that was the smallest one year gain since January 2022.

Used car and truck prices increased 1.2% while new vehicle prices increased 0.5%. Transportation services are up 7.3% year over year, and egg prices increased 3.2% for the month and 36.8% year over year.

Experts say that while there were no surprises, the Federal Reserve is still short of its 2% inflation target. It’s expected the Fed will pause interest rate cuts, for now, but markets are likely continue to fear inflation because President-elect Trump has floated several policies that economists say could reignite inflation.