Prices fell in December as inflation continues to moderate – CNN


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After about 3 years, inflation Decline on a monthly basis.

Consumer prices fell 0.1% in December, the Bureau of Labor Statistics reported Thursday in its Consumer Price Index. The last time the price fell below the previous month was in May 2020.

A closely watched inflation gauge also showed last month’s year-on-year price continued to decline, slowing to 6.5% from 7.1% in November. This is the smallest annual growth rate since May 2021.

remove food, energy pricesCore CPI, which tends to be more volatile, was 5.7%, down from 6% annualized in November and up 0.3% from the previous month.

“It will be a real break for consumers, a real respite for families, and further proof that my economic plan is working,” President Joe Biden said Thursday. Yes, but it’s going in the right direction.”

Brian Dees, Biden’s chief economic adviser and head of the National Economic Council, told CNN’s Kate Balduan that the latest report and the downward trend in prices over the past few months are “encouraging.” Told. Latest Job Reportshowed the economy added 223,000 jobs in December and the unemployment rate fell to 3.5%.

“We’re seeing the kind of easing that we’d like to see. Importantly, we saw it in the context of a quarter in which our labor market remained resilient.” he said. “The country’s unemployment rate has reached a 50-year low and workers are seeing real wages rise.”

Thursday’s report was the new first inflation report. And the Federal Reserve Board (Fed) will meet at the end of the month to decide how aggressively it will tackle rising costs.

“Today’s CPI numbers are another sign that inflation is heading in the right direction,” said Mike Lowengart, head of model portfolio construction at the Morgan Stanley Global Investment Office. This indicates that the peak is likely to be in the rear.

But we’re not “out of the woods” yet, he said. The annual core CPI is well above his 2% target rate for the Fed.

“The Fed remains adamant about keeping interest rates high to bring inflation back to normal levels,” he added.

2022 is Rattled Ride for AmericansPrices soared in the first half of the year, Inflation hit a high of 9.1% in JuneIt has been on a downward trend in the months since.

Economists had expected the latest CPI data to show weakness given that gas prices have fallen from their painful record highs this summer.

Thursday’s CPI report showed just that…and some. Prices for regular unleaded gasoline fell 9.6% from November, contributing to a 2% year-on-year price drop, the first annual price drop for the category since January 2021.

Rising pump prices aside, inflation is easing across a broad range of sectors.

Durable goods were some of the first to see a slowdown in price gains, followed by non-durable goods (products with a lifespan of less than three years), according to Morning Consult economic analyst Kayla Brune. rice field.

However, food prices have remained stubbornly high, a trend expected to continue for much of this year, and inflation concerns persist in the service sector.

“Demand for services also seems to be slowing,” says Brune. “We’ve seen a sharp rise in price sensitivity and a drop in deals, so consumers as a whole are becoming more budget-conscious, not just for products as they were last year, but for services as well. ”

This includes putting money from eating out back into the grocery store and cutting back on travel plans. reduce overall spendingshe said.

Prices for used cars and trucks, airfare, and hospital services fell through November and December, while other key areas saw a slower pace of gains. Most notably, food prices rose at the lowest monthly rate since March 2021, as BLS data show.

“This month’s meal [at home] Prices rose by only two-tenths of a percent. Economist Dean Baker, co-founder of the Center for Economic Policy Research, said:

However, it is still higher than overall inflation, with prices rising 11.8% annually in December, with certain products being significantly higher.

Egg prices skyrocketed in December, partly due to an outbreak of bird flu, which was 59.9% higher than the previous year, the highest annual increase since 1973.

Biden acknowledged the price increase on Thursday, saying: pushed up the price of eggs all over the United States. ”

Still, George Calhoun, an economics professor and director of the quantitative finance program at Stevens Institute of Technology in New Jersey, said other price movements bode well for overall inflation and the broader economic picture. Stated.

“If you convert the month-over-month rate from July onward to an annualized rate, the monthly interest rate compounded annually is about 2%. [the Fed’s target]said Calhoun. “I think inflation is really over and what we have in the year-over-year readings is the built-in delay in recognizing it.”

Economists expect the Fed to continue slowing the pace of rate hikes in 2023. But the end of the tightening cycle is still “some distance away,” said Kaylin Birch, a global economist at the Economist Intelligence Unit.

The decline in headlines was largely due to falling energy prices, and global oil prices are not expected to fall further in 2023, she said in a statement. In addition, December core inflation rose 0.3% from November.
“This steady increase is all the more cause for concern as it reflects the impact of still-strong consumer demand.

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