Inflation Climbs Faster than Expected in December to 3.4%

The Labor Department said Thursday that the consumer price index, a broad measure of the price of everyday goods including gasoline, groceries and rent, rose 0.3% in December from the previous month, more than expected. Prices climbed 3.4% from the same time last year.

Other parts of the report indicated that inflation is continuing to retreat, albeit slowly. Core prices, which exclude the more volatile measurements of food and energy, climbed 0.3%, or 3.9% annually.

Housing costs were the biggest driver of inflation last month. Rent costs rose 0.4% for the month and are up 6.2% from the same time last year.

Other price gains also proved persistent in December. Food prices rose 0.2% over the course of the month. Grocery costs rose 0.1% last month and are up 1.3% compared with the same time last year.

Energy costs, meanwhile, climbed 0.4% in December, including a 0.2% increase in gasoline prices and a 1.3% spike in electricity.

TheĀ Federal ReserveĀ has signaled it is closely watching the report for evidence inflation is finally subsiding as policymakers try to cool the economy with a series of interest rate hikes. Officials approved 11 rate increases in a span of just 16 months, lifting the benchmark federal funds rate from nearly zero to the highest level since 2001.