US inflation picks up more than expected in December

Consumer prices in the US rose again in December, driven by higher costs for housing, medical care, dining out and car insurance.

Inflation, the rate at which prices climb, was 3.4% over the year, the Labor Department said.

That was up from 3.1% in November, accelerating more over the month than many analysts had expected.

The figure is likely to keep the US central bank cautious about declaring victory in its inflation fight.

Inflation in the world's largest economy has dropped sharply since peaking at 9.1% in June 2022, when the war in Ukraine sent energy costs soaring.

The Federal Reserve responded by raising borrowing costs significantly to cool the economy and ease price pressures. It said last month it had likely finished raising rates, fuelling debate about when it might start cutting them again.

While price increases for goods have cooled, as supply bottlenecks from the pandemic clear, the report suggests that progress in other areas is proving more difficult, said Brian Coulton, chief economist at Fitch Ratings.

"This will give the Fed grounds for caution and they are unlikely to cut rates as quickly as the markets currently expect," he said.