Despite a decrease in inflation to 6.5% in December, prices continue to be unacceptably high.

The rate of inflation stayed low for the entire month of December, which is the most recent evidence that excessively high consumer prices are finally beginning to lose their stranglehold on the economy of the United States of America.

The United States Department of Labor announced on Thursday that the consumer price index, which is a broad gauge of the price changes for everyday products such as gasoline, groceries, and rents, decreased by 0.1% in December compared to the previous month. The price increase came in at 6.5% on a yearly basis.

Both of these data were in line with the estimates made by experts at Refinitiv, which may provide the Federal Reserve a cause to further delay its aggressive campaign of interest rate hikes when policymakers meet the following month.

It marked the slowest yearly inflation rate since October 2021 and the slowest monthly inflation rate since April 2020, when the COVID-19 lockdowns were at their height. Both of these milestones occurred during the height of the economic crisis. Nevertheless, inflation is still around three times greater than its average level prior to the epidemic, highlighting the ongoing strain that high prices inflict on the finances of millions of people in the United States.

Core prices increased by 0.3% in December compared to the previous month, which is an increase from the 0.2% increase that occurred in November. These prices are determined by excluding the more volatile measurements of food and energy. The price of the essentials has increased by 5.7% when compared to the same time last year. These numbers were also consistent with what was anticipated by economic analysts.

After the data revealed that prices had fallen during the previous month, the market responded positively, sending the Dow Jones Industrial Average up 146 points. Futures on the S&P 500 gained 0.5%, while those on the Nasdaq jumped roughly 0.6%.

According to Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office, “today’s CPI reading is another sign that inflation is heading in the right direction and indicates the peak is likely in the rear view.” “Today’s CPI reading is another sign that inflation is heading in the right direction and indicates the peak is likely in the rear view,” “However, we are not out of the woods quite yet because it is still significantly above the Fed’s target rate, and the Fed has been emphatic that they would maintain rates high in order to drive inflation back to normal levels.”




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