U.S. inflation higher than expected in December as food and housing prices run hot

Higher rents and food prices boosted overall U.S. inflation in December, a sign that the Federal Reserve's drive to slow inflation to its 2% target may be a bumpy one.

The Consumer Price Index grew at an annual rate of 3.4%, according to the latest report from the Labor Depart, a 0.1% rise from the 3.1% annual inflation in November, and 0.2% more than the 3.2% economists expected. 

Excluding volatile food and energy costs, so-called core prices rose just 0.3% month over month, unchanged from November's increase. Core prices were up 3.9% from a year earlier, down a tick from November's 4% year-over year gain. Economists pay particular attention to core prices because, by excluding costs that typically jump around from month to month, they are seen as a better guide to the likely path of inflation.