U.S. inflation increased by the most in eight months in December amid robust consumer spending on goods and services, suggesting the Federal Reserve would probably be in no hurry to resume cutting interest rates soon.

The Consumer Price Index report for January is expected to show broadly unchanged annual inflation according to nowcasts. That may be broadly good news for the Fed.

U.S. prices increased in December while consumer spending surged, suggesting that the Federal Reserve could delay cutting interest rates for some time this year. The personal consumption expenditures (PCE) price index rose 0.

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An inflation gauge closely watched by the Federal Reserve rose slightly last month, the latest sign that some consumer prices remain stubbornly elevated, even as inflation is

The increase was in line with economists' expectations. In the 12 months through December, the PCE price index advanced 2.6%. That was the biggest gain in seven months

The central bank needs to see further progress on inflation or weakness in the labor market to resume interest rate cuts.

Friday’s report from the Commerce Department showed that consumer prices rose 2.6% in December from a year earlier, up from a 2.4% annual pace in November and the third straight increase.

“The Fed’s prognosis is for a slower pace of monetary easing moving forward, as the economy is doing well and prices are only slowly returning to target in an environment of great uncertainty,” said Carl Weinberg, chief economist at High Frequency Economics. “These data support that strategy.”

The Commerce Department released a closely watched report on Friday showing consumer prices in the U.S. increased in line with

The numbers: Wages and benefits for American workers continued to decelerate in the fourth quarter, the Labor Department said Friday. The employment cost index rose at a 3.8% clip in the 12 months ending in December, down slightly from a 3.9% rate in the prior quarter. It is the lowest year-over-year gain since the third quarter of 2021.

Americans are not as confident of the economy as they were a few months back. Markets have been volatile from the beginning of this year as inflation has been showing signs of climbing again, prompting the Federal Reserve to adopt a cautious approach and pause its rate cut campaign.