Consumer Prices (CPI) Match Expectations in December

DEVELOPING: The Labor Department said Wednesday the Consumer Price Index (CPI) found prices at the consumer level increased 0.3% in December, matching the estimate. As households paid more for gasoline and rental accommodation, the CPI saw the largest year-on-year increase in 2-1/2 years, a sign that inflation pressures could be building.

Excluding the volatile food and energy components, prices were up 0.2%, also matching expectations.

Rising inflation comes against the backdrop of increased optimism and the prospect of an economic revival in manufacturing, particularly following the surprise election of President-elect Donald J. Trump. But that also raises the possibility the Federal Reserve will raise interest rates at a faster pace than currently anticipated.

The U.S. central bank had previously forecast just three small rate hikes this year. It raised its benchmark overnight interest rate by 25 basis points to a range of 0.50% to 0.75% last month.