Inflation (Slowly) Slows

US inflation rose 6.5% year-over-year in December, according to figures released yesterday, meeting analyst expectations and marking a drop from 7.1% in November. While reflecting increased costs over a 12-month period, the figure marks a 0.1% drop in the seasonally adjusted consumer price index from November. It also marks the slowest annual rate of inflation since October 2021 (see data). The decline in the index—a measure of inflation that tracks the change in prices of a basket of goods and services (see 101)—was driven primarily by decreases in the cost of energy. Gasoline prices dropped 9.4% from November and were down 1.5% year-over-year. The core CPI, which excludes volatile food and energy prices, rose 5.7% year-over-year, down from 6% the previous month. The data come on top of a continuing strong labor market, with December unemployment reported at 3.5%, the lowest in five decades.