Prices fell in December as inflation continues to moderate

(CNN) — For the first time in nearly three years, inflation fell on a monthly basis.

Consumer prices decreased by 0.1% in December, the Bureau of Labor Statistics reported Thursday in its Consumer Price Index. The last time prices were lower than the previous month was in May 2020.

The closely watched inflation gauge also showed that year-over-year prices continued to cool last month, slowing to 6.5%, from 7.1% in November. It’s the smallest annual increase since May 2021.

Stripping out food and energy prices, which tend to be more volatile, core CPI came in at 5.7%, down from November’s 6% annual rate and up 0.3% from the month before.

It’s the first inflation report of the new year — and the last before the Federal Reserve meets at the end of the month to determine how aggressively it will tackle rising costs.

2022 was a rickety ride for Americans. Prices skyrocketed during the first half of the year, with inflation hitting 9.1% at its crest in June. It’s been coasting downward in the months since.

This story is developing and will be updated.