US Inflation Cools Again, Giving Fed Room To Downshift on Rates

US inflation continued to slow in December, adding to evidence price pressures have peaked and offering the Federal Reserve room to slow the pace of interest-rate hikes next month. From a report: Excluding food and energy, the consumer price index rose 0.3% last month and was up 5.7% from a year earlier, according to a Labor Department report Thursday. Economists see the gauge -- known as the core CPI -- as a better indicator of underlying inflation than the headline measure. The overall CPI fell 0.1% from the prior month, with cheaper energy costs fueling the first decline in 2 1/2 years. The measure was up 6.5% from a year earlier. US stock futures dropped before paring losses and Treasuries fluctuated. All of the figures matched the median estimates in a Bloomberg survey of economists. The data, when paired with prior months' lower-than-expected readings, point to more consistent signs that inflation is easing and may pave the way for the Fed to downshift to a quarter-point hike at their next meeting ending Feb. 1. That said, the central bank's work is far from over. Resilient consumer demand, particularly for services, paired with a tight labor market threaten to keep upward pressure on prices.

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