Annualized inflation in the UnitedStates has fallen for the sixth consecutive month in December, down to 6.5%, a drop of 0.6% from the previous month, according to the latest data released by the Bureau of Labor Statistics (BLS).
Month-on-month, the US CPI decreased by a marginal 0.1%, having increased by the same figure between October and November.– a basket that excludes food and energy - as it rose by 0.3% last month and is stubbornly high at 5.7% in the year to December.
The shelter index was the dominant factor behind the rise, as it surged by 0.8%, a figure that was equaled by the rent index, which increased month-on-month by 0.2%., as research from Dow Jones found that the consensus was for a 0.1% inflation decrease on monthly basis, but a 6.5% annualized increase.the fall in annualized inflation will serve as a tonic to the marketsThe latest inflation data may encourage the Federal Reserve to decelerate its course of interest rate hikes.
However, the minutes of the last Federal Open Market Committee released last week indicated its hawkish stance is highly likely to continue, even though the last hike in December 2022 was only 0.5%, compared to earlier recent hikes which were 0.75%.The United States 2-Year Treasury yield fell, by 0.1%, down to 4.12% in the aftermath of the announcement of the data, after having climbed to 4.25% just before the CPI data was released.
Three of the six major grocery store food group indexes increased over the month, as meat, poultry, fish, and eggs prices increased by 1%. Fruit and vegetables saw a decline in prices by 0.6%.There was better news about energy prices, as they dropped by 4.5% in December, which was a bigger fall than the monthly fall of 1.6% that was seen in November’s inflation figures. This was spearheaded by a considerable 9.4% fall in the price of gasoline.
Following the data release, the US Dollar fell against the British Pound, the Euro, and the Yen, as markets come to believe the Fed will go easier on rate hikes.
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