Gas and housing prices pushed up America's cost of living in December

Gas station pumpJoe Raedle/GettyRaul Rivero uses a gas station’s pump to fill his vehicle with gas on February 4, 2013 in Miami, Florida.

US consumer prices accelerated in line with expectations in December, led by rising costs of gas, housing, and medical care.

The Consumer Price Index (CPI) released on Wednesday showed that the basket of prices increased by 0.3% from November, and 2.1% year-over-year.

Excluding volatile food and energy costs, core CPI climbed 0.2% month-on-month and 2.2% year-on-year.

Every sub-category gained except groceries, piped gas and clothes.

Year-on-year core CPI — considered the benchmark gauge of price inflation for this data series — increased for the first time in five months. However, the stronger dollar could make the costs of US products cheaper in the coming months.

While the Federal Reserve monitors inflation trends to determine whether to cool the economy by raising interest rates, its preferred gauge is the more comprehensive Personal Consumption Expenditures index. It had expected the drag on inflation from low energy prices to be transitory.

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