NEW YORK – Jan. 20, 2017 – Annual inflation hit a 21/2-year high in December amid rising gasoline prices as a core measure of inflation increased moderately.

The consumer price index rose 0.3 percent, the Labor Department said Wednesday, matching economists’ estimates. Prices were up 2.1 percent the past year, the largest annual jump since May 2014.

Core inflation, which excludes volatile food and energy items, advanced 0.2 percent, also in line with economists’ forecasts. The reading was up 2.2 percent the past 12 months.

Pump prices increased 3 percent last month and have climbed steadily since August. Regular unleaded gas averaged $2.34 a gallon Tuesday, up from $2.24 a month ago, according to AAA. But grocery prices fell for the eighth consecutive month. Prices increased 0.3 percent for rent, 1.9 percent for airline fares, 0.5 percent for used cars and trucks and 0.8 percent for motor vehicle insurance. Clothing prices fell 0.7 percent.

“Overall, inflationary pressures at the consumer level still remain modest but are rising now compared to year-ago levels,” Contingent Macro Research wrote in a note to clients.

The Federal Reserve raised its benchmark interest rate last month for the first time in a year and forecast three hikes in 2017. Fed policymakers cited inflation that could accelerate as a result of a low unemployment rate that’s likely to push up wages and President-elect Donald Trump’s fiscal stimulus plan. Fed Chair Janet Yellen has said she still expects only gradual hikes as consumer prices increase moderately.

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