US inflation hits 2.9% in December, increasing pressure on Fed to pause rate cuts

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US consumer inflation rose for a third straight month in December as energy prices increased, according to government data published Wednesday, adding pressure on the Federal Reserve to pause rate cuts.

The consumer price index (CPI) accelerated to 2.9 percent last month from a year ago, up from 2.7 percent in November, the Labor Department said in a statement.

This was in line with the median forecast of economists surveyed by Dow Jones Newswires and The Wall Street Journal.

The US central bank has cut rates by a full percentage point since September as it looks to bolster the labour market.

The recent uptick in inflation adds to expectations that it will remain firmly on pause at its next rate decision later this month.

In good news for the Fed, annual inflation excluding volatile food and energy costs came in at a lower-than-expected 3.2 percent last month, marking a slight decline from a month earlier.

On a monthly basis, inflation rose by 0.4 percent in December, and by 0.2 percent excluding food and energy.