The key inflation in the United States rose in December 2024 as prices grew for gas, eggs, and used cars.
A Labor Department report showed the Consumer Price Index (CPI) rose 2.9 per cent on an annual basis in December 2024, the highest since last July.
On a monthly basis, the index rose 0.4 per cent. In November, the CPI stood at 2.7 per cent.
Excluding the volatile food and energy components, the CPI increased 0.2 per cent in December. The core CPI had risen 0.3 per cent for four straight months.
In the 12 months through December, the core CPI increased 3.2 per cent after climbing 3.3 per cent in November.
The latest inflation data strengthens the case that the Federal Reserve's interest rate cutting cycle is not over yet.
The US central bank will hold its next monetary policy meeting on January 28-29.
Market participants are worried that the potential for tariffs after President-elect Donald Trump re-enters the White House next week could stoke inflation and limit the Fed's ability to cut rates to a greater extent.
Goldman Sachs expects two rate cuts this year, in June and December, while Bank of America Securities said the Fed's easing cycle is over.
The US Fed began reducing interest rates in September last year and has lowered its benchmark overnight rate by 100 basis points to the current 4.25 per cent -4.50 per cent range.
The last reduction was in December when Fed policymakers projected two rate cuts for 2025 instead of the four they had forecast in September. The policy rate was hiked by 5.25 percentage points between March 2022 and July 2023.
US stocks rallied on Wednesday after inflation data boosted investors’ hopes for interest rate cut by the Federal Reserve this year.
At the opening bell, the Dow Jones Industrial Average rose 409.5 points, or 0.96 per cent, to 42,927.76. The S&P 500 rose 62.3 points, or 1.07 per cent, to 5,905.21, while the Nasdaq Composite rose 305.9 points, or 1.61 per cent, to 19,350.313.
Gold prices extended gains on Wednesday, as the US dollar dipped after US core inflation data came in softer than expected.
Spot gold gained 0.4 per cent to $2,688.19 per ounce by 0915 a.m. ET (1415 GMT). US gold futures were up 1.1 per cent to $2,711.40.
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