U.S. inflation surges to record high in nearly four decades

U.S. consumer prices in December continued to rise at the fastest annual pace in almost 40 years, which could push the Federal Reserve to raise interest rates earlier, the U.S. Labor Department reported on Wednesday.

The consumer price index (CPI) last month rose 0.5 percent from the previous month and 7.0 percent from a year earlier, the largest 12-month increase since June 1982, according to the Bureau of Labor Statistics of the department.

The latest data marked a new high after the CPI in November rose 0.8 percent from the previous month and 6.8 percent from a year earlier.

The so-called core CPI, which excludes food and energy, rose 5.5 percent over the last 12 months, up from 4.9 percent over the 12 months ending November, the report showed. The energy index rose 29.3 percent over the last year and the food index increased 6.3 percent.

The inflation data came one day after U.S. Federal Reserve Chair Jerome Powell said that the central bank will have to raise interest rates more if inflation remains elevated.

"If we see inflation persisting at high levels longer than expected ... if we have to raise interest rates more over time, we will," Powell said at his confirmation hearing before the Senate Banking Committee, noting that U.S. inflation is running "very far above" the central bank's target of 2 percent.

Fed officials' median interest rate projections released mid-December showed that the central bank could raise the federal funds rate, the benchmark interest rate, three times this year from its current record-low level of near zero.