Inflation held steady in December, remaining well above the Fed's 2% target

Inflation rose at a steady pace in December and remained persistently above the Federal Reserve's target rate as policymakers consider the case for interest rate cuts amid economic uncertainty.

The Bureau of Labor Statistics said on Tuesday that the consumer price index (CPI) – a broad measure of how much everyday goods like gasoline, groceries and rent cost – rose 0.3% on a monthly basis in December and held steady at 2.7% on a year-over-year basis.

Both of those figures were cooler than the expectations of economists polled by LSEG.

So-called core prices, which exclude volatile measurements of gasoline and food to better assess price growth trends, were up 0.2% from the prior month and 2.6% from a year ago. Those figures were slightly below economists' expectations of 0.3% and 2.7%, respectively.

High inflation has created severe financial pressures in recent years for most U.S. households, which are forced to pay more for everyday necessities like food and rent. Price hikes are particularly difficult for lower-income Americans, because they tend to spend more of their already-stretched paychecks on necessities and have less flexibility to save.

Food prices increased 0.7% for the month and were up 3.1% from a year ago. The food at home index was up 2.4% from a year ago, while the food away from home index was up 4.1% since last year. Both were up 0.7% on a monthly basis.

Meats, poultry and fish prices were up 6.9% from a year ago, while egg prices were down 8.2% compared with last year as a supply shortage from an avian flu outbreak has eased. The fruits and vegetables index showed prices rose 0.5% on a monthly basis and were flat compared with a year ago.

Energy prices rose 0.3% in December and are 2.3% higher than a year ago. Gas prices were down 0.4% on a monthly basis and have decreased 3.4% since this time last year. Electricity costs declined 0.1% in December but have risen 6.7% in the past year.

Housing prices increased 0.4% in December and were up 3.2% compared with last year. The BLS noted that the increase in the shelter index was the largest factor in the monthly CPI increase. Tenants' and household insurance costs increased 1% in December and have risen 8.2% over the last year.

Transportation services costs were up 0.5% for December and 1.5% from a year ago. Auto maintenance and servicing costs increased 0.5% for the month and are up 4.9% from last year, while vehicle repair costs declined 3.7% on a monthly basis and are up 6.2% from last December.

The inflation data comes after a 43-day shutdown that lasted from the start of October until mid-December disrupted previous CPI inflation reports, as the BLS was unable to produce a report for October and its ordinary data collection routines were disrupted in the first half of November.

Economists have cautioned that, because of the disruption, the process used by the BLS to carry-forward data through the lapse in data collection could impart a downward bias on the CPI inflation data through April this year.

This is a developing story. Please check back for updates.