Inflation in the US
| Gal Rekover, Devar News
Inflation in the US continues its slowing trend in December as well. The annual rate dropped to 6.5%, down from a rate of 7.1% recorded in November, according to the Bureau of Labor Statistics in the US. The recorded rate is the one observed by the analysts. This is the fifth consecutive decrease in the price index, which reached a peak of 9.1% in July, the highest since 1981.
In light of this expectation, for a further slowdown in the rate of inflation, price increases were recorded in the stock markets yesterday. The S&P 500 index rose by 1.3%, while the Nasdaq index rose by 1.8%. Increases were also recorded in the European stock markets. In light of the encouraging data, rate increases are expected to continue today as well.
On a monthly basis, it decreased by 0.1% in December, after increasing by 0.1% in November. The most significant contribution to the decline came from fuel prices as the entire energy index fell by 4.5% during December. On the other hand, the food index increased by 0.3%.
The rate of inflation excluding food and energy rose by 0.3% in December, after rising 0.2% in November. The increase is mainly the result of increases in the shelter index (housing services) and the rent index, each by 0.8%. The volatile food and energy spending from the CPI provides so-called core inflation, which is receiving more attention from central bankers.
Despite the containment trend, senior officials at the Federal Reserve, headed by Governor Jerome Powell, came back and made it clear last week that they intend to persist with the tight monetary policy at the heart of which is the high interest rate. In a speech last Tuesday to the Swedish Riksbank, Powell noted the need for “unpopular” decisions, and meant the continuation of the tight policy, designed to slow down economic activity.
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