Your Money Matters: Inflation continues to rise, but wage growth outpaces prices

The latest inflation report shows that consumers are still feeling the pinch as prices continue to climb.

The Consumer Price Index (CPI) rose by 2.9 percent in December from a year earlier, marking the third straight month of increases. Prices rose by 0.4 percent from November to December.

Energy Costs and Rising Prices

Energy costs drove much of the increase, with gas prices up by 4.4 percent from November. Other factors contributing to the rise include continued increases in rent, higher used car prices, and rising food prices at both grocery stores and restaurants.

Wage Growth Outpaces Inflation

Despite rising costs, wages are growing at a faster rate than inflation.

“Annual wages are up by 3.9 percent — that’s a full percentage point above the consumer price index. So if you got that raise, it should help you make up the difference,” said Jill Schlesinger, a CBS News business analyst.

Federal Reserve’s Response

The Federal Reserve has been using higher interest rates to fight inflation. With the latest inflation data and the arrival of a new administration, the Fed is expected to pause rate cuts as it continues to monitor inflation trends.

Policymakers will also be watching potential price impacts from tariffs promised by President-elect Donald Trump, especially on goods imported from China.