Inflation rose 2.7% on an annual basis in December report that shows stabilizing prices

Prices rose 2.7% for the year ending in December, the federal government said Tuesday, matching the previous month’s report and Wall Street’s expectations.

The Consumer Price Index rose 0.3% for the month, driven by an increase in shelter costs. The indexes for food and energy — driven by a rise in gas utility costs — also rose.

Prices went down in some categories, including used cars and fuel oil.

Heather Long, the senior economist at Navy Federal Credit Union, called it a “mild” inflation report.

“This is encouraging news for the economy,” she wrote on X. “But keep an eye on utility costs. They have risen a lot in the past year. This helps explain some frustration on Main Street right now.”

The rate of inflation has decreased significantly from extreme highs during the Biden administration.

While it remains above the Federal Reserve’s target rate of 2%, the stable nature of prices could compel the central bank to cut interest rates again this month to boost a lagging job market. It could keep rates steady as part of a wait-and-see approach.

Cooling inflation would help President Trump politically, as November’s midterm elections loom. The Fed cut rates at its past three meetings, but Mr. Trump says the central bank needs to be more aggressive.

The Department of Justice opened a grand jury inquiry into whether Fed Chair Jerome Powell lied to Congress about the costly renovation of two Fed buildings in Washington.

Mr. Powell, who had ignored Mr. Trump’s taunting for months, issued a blunt statement calling the probe a pretext to intimidate the Fed over interest rates.

The inquiry also sparked rare bipartisan criticism in Congress. Some Republicans said they have known Mr. Powell for a long time and considering him a criminal is far-fetched.

Mr. Trump praised the inflation report on Tuesday as “great” for the country.

“That means that Jerome ‘Too Late’ Powell should cut interest rates, MEANINGFULLY!!! If he doesn’t he will just continue to be, ‘TOO LATE!’” Mr. Trump wrote.

Rep. Brendan Boyle of Pennsylvania, the ranking Democrat on the House Budget Committee, said Mr. Trump’s tariffs — a duty on foreign goods — and pressure on the Fed are getting in the way of deeper progress.

“Instead of lowering costs as he promised, the President is now attacking the independence of the Federal Reserve and directing his Justice Department to target the Fed Chair for refusing to bow to political pressure,” Mr. Boyle said. “That kind of interference only adds uncertainty and chaos to an already fragile economy.”

House Budget Committee Chairman Jodey Arrington disagreed, calling the CPI report encouraging.

“For four years, President Biden and Democrats ushered in one self-inflicted disaster after another. Their unprecedented tax and spending spree lit the fuse on historic inflation and created the worst cost of living crisis in 40 years, crushing working families,” the Texas Republican said. “In response, the American people elected a new CEO in President Trump and unified Republican leadership to usher in a new era of affordability.”