Consumer prices rose 2.7 percent over the past year, according to data released Tuesday by the Bureau of Labor Statistics, with the figure dropping to 2.6 percent when excluding volatile food and energy prices. This latest report, reflecting price changes through the end of the year, comes as the Federal Reserve prepares to meet in two weeks.
The rate remained consistent with November's figures, which had been affected by data collection irregularities stemming from a government shutdown. The annual inflation rate showed a slight deceleration compared to the beginning of 2025, prior to the implementation of tariffs on durable goods.
The Consumer Price Index (CPI) was notably influenced by a decrease in the cost of used cars and trucks, which fell 1.1 percent over the month and registered a 1.6 percent increase over the year.
The report is the last to be released before the Federal Reserve's upcoming meeting. Following the December employment report, which indicated a drop in the unemployment rate to 4.4 percent, analysts anticipate that the Federal Reserve will likely maintain current interest rates. Since September, the Fed has cut interest rates three times.
The Trump administration's imposition of tariffs on goods from most countries throughout 2025 has been cited as a factor contributing to rising prices, particularly for durable goods. The tariffs, designed to protect domestic industries and encourage domestic production, have faced criticism for potentially increasing costs for consumers.
The Federal Reserve's monetary policy decisions are heavily influenced by inflation data and employment figures. The central bank aims to maintain price stability and full employment. The upcoming meeting will provide an opportunity for policymakers to assess the current economic landscape and determine the appropriate course of action regarding interest rates.
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